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Archive for Tuesday, April 26, 2005

Consumers expected to absorb diaper costs

April 26, 2005

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— Diapers will start to cost more this summer as Procter & Gamble Co. and Kimberly-Clark Corp. raise prices to offset higher costs for materials such as resins and paper.

P&G, the maker of Pampers and Luvs, said Monday that it would raise list prices on its diapers and training pants by about 5 percent on each of those products, effective July 15.

While the company does not set shelf prices, Cincinnati-based P&G said the move likely would mean consumers would pay about 1 cent to 3 cents more per diaper.

Kimberly-Clark, which posted a first-quarter profit Monday, said it planned to match P&G's move, which comes after private-label manufacturers took their prices up about 7 percent to offset higher costs.

Consumer products companies have grappled with higher costs on materials such as oil and paper for months, but prices on key diaper items, such as absorbents and adhesives, have risen lately, Kimberly-Clark said.

"My understanding is that some of these things are actually in short supply ... so that really is a more recent phenomenon," said Oppenheimer & Co. analyst Linda Bolton Weiser. She rates Kimberly-Clark a "buy" and Procter & Gamble "neutral."

Kimberly-Clark, whose other products include Kleenex tissues, said its costs for raw materials, such as fiber and resin, as well as distribution costs jumped about $100 million in the first quarter.

Dallas-based Kimberly-Clark said it expected such costs to continue to rise in the second quarter. Besides Huggies diapers, the company also will raise U.S. prices on Pull-Ups training pants, GoodNites youth pants and Little Swimmers swim pants. It will be the first time the price on Huggies has gone up since 2000.

P&G said the move was its first broad price increase on Pampers since February 2003, when prices rose about 1.8 percent.

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