Toilet Paper, Tissues, Diapers About to Get More Expensive: Consumer Goods Company

Shoppers browse in a supermarket in St. Louis, Missouri, on April 4, 2020. Lawrence Bryant/Reuters

Consumer goods manufacturer Kimberly-Clark Corp. said it is planning to raise prices for the second time this year due to “significant inflation,” according to its CEO.

The company, which makes Kleenex and Huggies diapers, expects input costs to rise by $1.4 billion to $1.5 billion during the current fiscal year, which is above a prior estimate that called for an increase of $1.3 billion.

Our earnings were negatively impacted by significant inflation and supply chain disruptions that increased our costs beyond what we anticipated," CEO Michael Hsu said during an earnings call, according to a news release from the firm. We are taking further action, including additional pricing and enhanced cost management, to mitigate these headwinds as it is becoming clear they are not likely to be resolved quickly.”

Hsu continued to say the firm “will continue to invest in our brands and capabilities as we navigate through this volatile and difficult macro environment. Our strategy is working, and we remain confident in our future and our ability to create long-term shareholder value.”

Hsu also told analysts on the call that the “global supply chain is under pressure and we do expect cost to remain elevated for a period.”

“Not all costs. ... But the polymer-based products seem like they’re going to remain elevated for a little while,“ he explained. ”We mentioned U.S. labor costs and pressures on transportation globally. I think that’s going to remain elevated for a while because I don’t see a fundamental catalyst to change that in the near term. And so that’s why we’re making some of our moves.”

The company said it has dealt with higher labor, freight, and input costs over the past year, with its profit margin falling by 29 percent in the third quarter but down from 33 percent the year prior.

Earlier this year, Kimberly-Clark raised prices on most of its consumer products, including Scott, Cottonelle, and Viva toilet paper.

“The increases will be implemented almost entirely through changes in list prices and are necessary to help offset significant commodity cost inflation,” the company said in a statement in June.

It comes as competitor Procter & Gamble, which makes Tide and Charmin, announced it would have to charge more for certain products, including oral care, beauty, and razor.

“We announced price increases to retailers in the U.S. on oral care, skincare, and grooming,” CEO Andrew Schulten said earlier this month. “It’s item by item,” he added, although he did not say how much the prices will rise.