Executives at 3M have doubled their forecast for the minimum impact inflation will have on the costs of their business, saying that prices are rising for commodities, labor, and logistics. To offset the higher costs, the company is pushing price hikes on customers.
The company is “raising prices everywhere,” Chief Financial Officer Monish Patolawala said on a call to discuss the company’s second-quarter results.
The St. Paul, Minnesota-based company has a broad view of the U.S. economy because its business makes a wide range of products including industrial materials, medical equipment, and consumer goods such as Scotch Tape and Post-It notes.
Like many companies, 3M was surprised by the strength of the inflationary pressures arising from strong demand and constraints that have pushed shipping costs far up. As recently as June, the company thought inflationary pressures would be waker.
“As a result of these increasing cost trends, we now forecast a full-year raw materials and logistics cost headwind in the range of $0.65 to $0.80 per share versus a prior expectation of $0.30 to $0.50. As we have discussed, we have been and are taking multiple actions including increasing selling prices to address these cost headwinds,” Patolawala said.
So when will it end? Probably not soon, given that demand remains very high despite rising prices and the supply chain remains snarled, particularly when it comes to shipping.
“It is a headwind that we expect to persist through the second half,” Chief Executive Officer Mike Roman said in an interview with Bloomberg News.
“There’s a lot of demand. There’s not enough supply based on all the v-shape recovery with the congestion in the ports, etc. And until that stabilizes itself out, I think we’re going to continue to see inflation. We have seen where crude prices have gone up much heavier than we had thought coming into the year,” Patolawala said.
The company said it expects demand for disposable respirators to decline later this year, which may read as a hopeful forecast about the public’s need for masking.
Originally found on Breitbart Read More