(Bloomberg) -- The maker of Scott toilet paper and Huggies diapers will soon start charging more for its consumer products to counter rising commodity costs.
Kimberly-Clark Corp., one of the biggest tissue producers, told U.S. and Canadian customers that it's raising prices for most consumer products to offset “significant” commodity cost inflation, with percentage increases in the mid-to-high single digits. Nearly all price hikes take effect in late June and impact baby and child care, adult care and Scott bathroom tissue businesses, the Dallas-based company said Wednesday in a statement.
Kimberly-Clark shares rose as much as 2.8% to a four-month high in U.S. trading before paring gains. The stock, which has risen 9.4% in the past year, was up 1.2% to $139.91 at 2:06 p.m. in New York.
The move by the maker of Kleenex tissues has triggered analysts' expectations that more companies will start raising prices for tissue products, to become the latest consumer good to be impacted by higher raw material costs during the pandemic.
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“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.
Though toilet-paper makers have the option to reduce costs by cutting back on the number of sheets and making other quality modifications, price increases are largely expected after the cost of pulp -- a wood product -- soared by 35% in the last year, Patel said.
Surging pulp is following record-high lumber prices, which have significantly increased the cost of homebuilding and reduced inventories at mills across 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.
This could be good news for Clearwater Paper Corp., a consumer tissue producer that makes some lower-tier product and skews toward recycled tissue grades, Wilde said.
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