Higher costs hit SOAP manufacturers and you will arrive to the buyers

Luv diapers, a product of Procter & Gamble, are displayed on a shelf in a store in Alexandria, on May 28, 2009.

Credit: Reuters/Molly RileyBy Jessica wohl

CHICAGO | Thu on April 28, 2011, 12: 02 pm EDT

CHICAGO (Reuters) - manufacturers of SOAP, diapers and other products for the home are spending much more fuel and raw materials than expected, which means more price increases are on their way to consumers.

Procter & Gamble co. (PG.)(N) dropped the high end of its benefit scheduled for the year on Thursday, as does everything possible to cut spending and raised some prices to compensate for much bigger increases for materials.

Consumer goods manufacturers are paying more for transportation and a variety of materials, pulp used to make fabrics for resin used to make detergent bottles.

Smaller rival Colgate-Palmolive Company (CL.)(N) those higher costs at its margins. Quarterly earnings met expectations of analysts, while the benefits of P & G was just the average forecast.

P & G, maker of the world's largest housewares, now expects its price soar three times as much to had anticipated the starting in the year, with peaks of diesel, resin, cellulose and other materials, said Chief Financial Officer Jon Moeller.

"" Do not want to enter shoulda, coulda, woulda; ""But if I come back, if we do not have $ 1.8 million in increases in commodity costs this year, have a fantastic line of Fund, said Moeller on a call with analysts.

"If someone in the line can help me with how forecasting commodity costs, just give me a call, I would be happy to talk about."

Group Unilever (ULVR.)(L) (UNc.AS) also feels a pinch of higher commodity costs. The Anglo-Dutch maker of Hellmann's mayonnaise and Dove soap said that this age cohort would squeeze more savings of costs of their operations.

The companies are banking on growing demand in countries such as China and the India as developed, such as United States and Western European markets growth has stagnated.

"We think are improving the economies of the world", said the Executive Director Bob McDonald of P & g. "the rate of improvement in developed markets is obviously slower than what we had originally anticipated".

The pace of economic growth in U.S. slowed in the first quarter, another sign that a rebound after the recession is longer that many had expected.

Increased materials costs are spreading throughout the packaged goods industry. Manufacturer of food drinks and snacks PepsiCo Inc (PEP).(N) published a lower quarterly profit on Thursday, hurt by the rising costs of commodities.

Shares of P & G rose 0.3 percent after falling during the session. Colgate rose 0.5 percent, Unilever fell 2.4 percent and Pepsi rose 1.4 percent.

NEW PRODUCTS, NOT ONLY NEW PRICES

Companies now cut domestic costs and switching to less costly materials when they can before resorting to the increase in prices, echoing action taken when expenditures increased in 2008.

P & G and its rivals have begun to raise the prices of products which are from diapers to detergent, added to the pressure of buyers, especially in markets such as United States, where growth remains slow.

They also hope to attract buyers with new products, which sometimes carry higher price tags. Fresh elements of P & G include Tide detergent pod, while Colgate left new toothpaste and Kimberly-Clark Corp (KMB).(N) is updating Huggies diapers.

Stifel Nicolaus analyst Mark Astrachan said that he believes that P & G is "a better position to beat in the current environment given its channelling of innovation and pockets."

P & G has implemented or announced price increases across brands they represent around 50% of sales in United States, but it is not increasing prices, much as it did in 2008, McDonald said.

Kimberly-Clark is to raise the prices of products such as Huggies by 3% to 7% from June. Its results quarterly, published on Monday, fell short of expectations. Energizer Holdings Inc. (ENR).(N), meanwhile, has already raised the prices of U.S. battery.

Clorox Co (CLX.)(N) has said that it would raise prices more frequently if the need arose. Their results are due on Tuesday.

P & G said it now expects fiscal year core income, excluding some items, of $3.91 per share to $3.96 per share. The high end of that forecast was previously $4.01 per share.

(Additional reporting by Brad dorfman in Chicago, and David Jones in London;) (Editing by Gerald e. McCormick, Dave Zimmerman)

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