Procter & Gamble will raise prices in September
Price increases announced on baby products, adult diapers and feminine-care brands
P&G CEO thanks his employees for helping through coronavirus crisis
P&G is making supplies during pandemic
Procter & Gamble Co. this fall will start charging more for household staples from diapers to toilet paper, the latest and biggest consumer-products company to announce price hikes.
The maker of Gillette razors and Tide detergent cited rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods.
The announcement, which came as P&G disclosed its quarterly financial results, follows a similar move last month by rival Kimberly-Clark Corp.
P&G said organic sales grew 4% in the quarter ended March 31, with the biggest gains in the company's beauty and fabric and home-care units.
Procter & Gamble aims to improve and add features to products, as the company increases prices so that consumers feel they are getting more, the company's operating chief said. (REUTERS/Molly Riley)
The results mark P&G's slowest overall organic sales increase since 2018, following a year in which the Covid-19 pandemic created high demand for products such as cleaning supplies, paper towels and toilet paper.
"It's a different situation, as everywhere in the world countries are in very different places as far as coming out of the pandemic," operating chief Jon Moeller said in an interview. "There is very strong consumption across the board."
While sales are cooling for some products, Mr. Moeller said, demand is recovering for others, such as beauty products and supplies sold directly to businesses that are reopening after widespread shutdowns.
AT THESE PRICES, PROCTOR IS A GAMBLE
Mr. Moeller said P&G aims to improve and add features to products, as the company increases prices so that consumers feel they are getting more. The price increases, to take effect in September, will be on baby products, adult diapers and feminine-care brands and will be in the mid-to high-single-digit percentage points, the company said.
The last time big consumer-products companies raised prices significantly because of materials costs was 2018, when surging pulp prices drove up the cost of diapers, toilet paper and other products.
Kimberly-Clark, maker of Huggies diapers and Scott paper products, said its percentage increases would be in the mid-to high-single digits and take effect in late June. They will apply to the company's baby and child care, adult care and Scott bathroom tissue businesses.
PROCTER & GAMBLE CALLS FOR CHANGE TO ANNUAL TV AD-BUYING PROCESS
Several food makers have raised prices as well. Hormel Foods Corp. said in February that it raised prices on its turkey products, such as Jennie-O ground turkey, in response to higher grain costs. J.M. Smucker Co. said it recently raised prices for its Jif peanut butter and that it might do the same with pet snacks because of higher shipping costs and other inflationary pressure.
The Labor Department said last week that its consumer-price index -- which measures what consumers pay for everyday items, including groceries, clothing, recreational activities and vehicles -- jumped 2.6% in the year ended March, the biggest 12-month increase since August 2018.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
During the quarter, P&G's net sales rose 5% to $18.1 billion, above the consensus forecast of $18 billion from analysts polled by FactSet. Volume was flat for the first time in years, while price and mix both increased 2%.
P&G posted net income of $3.27 billion, or $1.26 a share, up from $2.92 billion, or $1.12 a share, a year earlier. Analysts expected net income of $3.09 billion.
The company maintained its forecast of organic sales growth of 5% to 6% for the fiscal year that ends June 30.