Tissue makers pass cost increases on their products
The first major company to announce adjustments was Kimberly-Clark this week; other companies are expected to report new prices soon
Kimberly-Clark has reported that it is notifying its customers in the United States and Canada of the price increase for most of its consumer products businesses in North America. The increases were reported by the company on Wednesday, 31, and according to K-C, they are needed to help offset the significant inflation in commodity costs, especially pulp.
Percentage increases are considered to be medium to high. Almost all readjustments will take effect at the end of June and will impact the tissue paper and personal care businesses, both for the care of babies and children as well as adults.
The measure by toilet tissue maker Scott and Kleenex tissues has triggered analysts’ expectations that other companies will start raising prices for tissue products, which is becoming the consumer good most recently impacted by rising raw material costs. with the pandemic.
“We expect Procter & Gamble to lend its support soon (critical for a successful hike) and Kruger Products to lead a similar initiative in Canada,” CIBC analyst Hamir Patel said in a note.
Although toilet paper manufacturers have the option to cut costs by cutting the number of sheets and making other quality modifications, price increases are widely expected after the cost of cellulose – a forest product – skyrocketed 35% last year, according to Patel. With the increase in raw material, fiber stocks are reduced in factories in North America.
“We wouldn’t be surprised to see similar moves from Georgia-Pacific (private) and Procter & Gamble,” BMO Capital Markets analyst Mark Wilde in a note, adding that these companies also face rising pulp costs.
That could be good news for Clearwater Paper Corp., a consumer tissue producer that makes some products using recycled paper, said Wilde.
