Yogurt diapers, global companies face higher costs in supply chain problems

File Photo: Shoppers leave Pigley Wigley Supermarket in Columbus, Georgia, USA on September 8, 2020. REUTERS / Elijah Nouvelage

October 20, 2021

(Reuters) – Tuesday’s results from Procter & Gamble and Danon SA, as well as phone maker Ericsson, show rising costs and supply chain disruptions, increasing margin pressure on global companies and rising shopper prices. Indicates that you are doing.

A panic buy occurred at the beginning of the pandemic, resulting in a large shortage of everything from toilet paper to packaged food. Global blockages and labor shortages have weighed on supply chain movements, causing protracted log jams in ports from China to California.

Many companies have relied on price increases to offset rising prices for the materials needed to manufacture and ship essentials such as diapers and bottled water. Executives and analysts said price increases will continue next year.

Procter & Gamble said operating margins were squeezed in the first quarter and expects to cost about $ 2.3 billion this year, compared to a previous forecast of about $ 1.9 billion.

The company has blamed rising raw material costs and rising diesel and energy prices, and said it did not expect these issues to be alleviated soon.

Danone, which sells bottled water from Activa yogurt and Evian, warned that inflationary pressures would increase next year after sticking to the outlook for 2021 on Tuesday, protecting operating profit from increased productivity and higher prices. I promised.

“As with almost everyone in and out of the sector, inflationary pressures are omnipresent. What began as an increase in material cost inflation is a widespread constraint affecting supply chains in many parts of the world. It has evolved, “said Jürgen Esser, Chief Financial Officer of Danon.

Sweden’s Ericsson told investors Tuesday that global supply chain issues will remain a major hurdle.

“In the second half of the third quarter, supply chain disruptions had an impact on sales, and these issues continue to pose risks,” CEO Börje Ekholm said in a statement.

The company said it was unable to provide certain hardware to its customers due to a lack of chips at the supplier and logistics issues.

Electric car maker Tesla will report the results on Wednesday. Investors are closely watching the carmaker’s margins. CEO Elon Musk previously spent a lot of money flying auto parts around the world to meet demand while cutting costs by procuring more local parts at his Chinese factory. He said he was working.

Some investors want to see how these costs add up.

“I think there’s probably a headwind in margins. Tesla investor Gene Munster, managing partner of venture capital firm Loup Ventures, said:” Increasing gross margins for cars in this environment. If I can, I think it will be a big plus. “

(Written by Bernard Orr and Anna Driver, edited by Nick Zieminski)

Yogurt diapers, global companies face higher costs in supply chain problems

Source link Yogurt diapers, global companies face higher costs in supply chain problems

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