As the debate over inflation rages, Newell Brands CEO Ravi Saligram is keeping his own tabs on rising costs.
Saligram tells FOX Business that he sees a short-term inflationary spike – hitting nearly $560 million in 2021 – with prices beginning to wane starting as early as the third fiscal quarter.
“This is obviously temporary, and some of these things will linger a bit longer than others,” Saligram said.
Adding that seven out of eight business units are taking price increases, the first round of increases hit Newell customers in mid-June, trickling down to the consumer level in the July-and-August time frame.
Another price increase will impact some of its brands again in October or November, he said.
CLICK HERE TO READ MORE ON FOX BUSINESS
That inflationary pressure is being “externally driven” by resin prices, ocean freight costs, the strengthening Chinese yuan, and domestic labor wage pressure, according to Saligram.
|NWL||NEWELL BRANDS, INC.||25.54||+0.33||+1.31%|
Saligram projects that raw material prices, for example, will “likely peak in the third quarter and then hopefully recede after that,” while ocean freight challenges will continue for at least the next six months before normalizing.
“It can’t go on like this forever,” he said.
At the same time, he projects that labor shortages – especially at the factory level – “will continue for some time.”
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Saligram noted that Newell, which has over a dozen brands, from Paper Mate, Sharpie and Mr. Coffee to Yankee Candle, is competing for labor in its factories not only with other manufacturing companies and distribution centers but also with retailers with restaurants.
“Given a lot of the stimulus…I think right now there’s been a little bit of reluctance on the part of some people to go back to work,” he said. “So that creates some wage pressure.”
To try and counter that pressure, the company is “increasing incentives to attract and retain employees” by raising wages as well as enhancing benefits and working conditions and employee programs, he said.
In the meantime, Saligram said the company is still focused on tightly managing other costs in order to keep the prices of products at a “good value.”
FED’S PREFERRED INFLATION READING SHOWS PRICES JUMP 3.5% ANNUALLY
Still, Saligram has an upbeat forecast for the year.
“In the face of $520 million of inflation…we’ve absorbed that and still delivering operating profit growth,” he said.
So while fears over inflation and supply challenges loom, “consumer demand is very high,” Saligram said.
“We’re chasing demand, which is a great place to be.”
View more information: https://www.foxbusiness.com/markets/newell-brands-inflation-economy