Price Hikes Are Working for Kimberly-Clark, Pepsi, Nestle

(Bloomberg) -- Kimberly-Clark Corp. joined consumer-goods giants that reported surprise sales gains in part by raising prices on key products, sending its shares surging the most since 2008.

To make up for higher costs for raw materials and currency fluctuations, consumer companies from PepsiCo Inc. to Nestle SA have been charging more for common household products, and it seems to be working so far.

Kimberly-Clark’s prices for tissue paper climbed 7 percent in North America last quarter from a year earlier, helping absorb $135 million in higher costs globally for pulp and other materials. PepsiCo passed through increases on its beverages, while Nestle’s gains came from hikes in categories such as bottled water.

The revenue boost from price increases may embolden other consumer-products makers to consider charging more, a possibility that will get the attention of Federal Reserve Chairman Jerome Powell and his colleagues as they watch for signs that inflation is finally perking up. Fed officials have put interest-rate hikes on hold amid price gains that have stayed below their 2 percent target for much of the past seven years.

Kimberly-Clark, based in Dallas, rose 6.9 percent to $130.44 at 12:20 p.m. in New York. The shares were up as much as 7.2 percent earlier, the biggest intraday gain since 2008. Leaving out currency fluctuations, first-quarter sales were up 3 percent from a year earlier. Including the currency effects, they fell 2 percent to $4.6 billion.

--With assistance from Brendan Murray.

To contact the reporter on this story: Crayton Harrison in New York at tharrison5@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Cecile Daurat

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