Nordic companies and their struggle with rising costs

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As prices of raw materials and components rise amid shipping problems and shortages of some goods, companies from the Nordic countries are trying to mitigate the financial impact.

Global corporate profits in the third quarter are likely to fall for the first time in 18 months as the spreading COVID-19 Delta variant squeezes supply chains and raises labour costs.

Below are comments from Nordic companies on their efforts to cushion the blow from rising costs:

AAK: “We have initiated a formal consultation process regarding production consolidation to further optimize our European bakery business in line with our strategy. This to improve cost efficiency and increase competitiveness while continuing to support our customers with the same high level of dedication and service.”

Assa Abloy: “Since raw material costs have continued to increase during the second quarter we have continued to implement numerous price increases that largely offset the cost impact.”

Atlas Copco: “A large part of the components used in production are sourced from sub-suppliers. The availability is dependent on the subsuppliers and if they have interruptions or lack capacity, this may adversely affect production. To minimize these risks, Atlas Copco has established a global network of sub-suppliers, which means that in most cases there are more than one sub-supplier that can provide a certain component.”

Bergs Timber: “Increased raw material prices have been offset by increased prices for our products and margins have increased.”

BillerudKorsnas: “We are implementing additional price increases in several of our segments to counterbalance cost increases in chemicals, energy, market pulp and logistics.”

Bonava: “Rising prices for construction materials and a shortage of input goods has had a limited impact on our projects to date. We are working actively to optimise orders and the flows to our construction sites, both through strategic purchases centrally for more markets and through close dialogue with local suppliers.”

Bravida: “We work with both contracts and long-term partnerships on the supplier side and with price increases in respect of customers. We therefore see no significant risk that higher commodity prices will affect our margin in the longer term.”

Carlsberg Chief Executive Cees ‘t Hart warned that while the company has hedged against rising commodity prices until the end of the year, “significantly higher” costs would hit the company next year, driven by rising prices for aluminium, barley, paper and oil.

Cargotec: “We are prepared to respond to the situation with price increases and active cooperation with our suppliers. Challenges in the supply chain and the related price increases mainly affected Kalmar’s results.”*

* Kalmar is one of Cargotec’s three business units.

Electrolux: “We have announced and started implementing additional price increases, taking effect gradually throughout the rest of the year.”

Essity: “Announced price increases in Consumer Tissue as a result of higher costs for raw materials, energy and distribution.”

Getinge: “Some minor measures to adjust costs were carried out and plans have been made to further adjust costs if necessary.”

Glaston: “Due to increasing material and freight costs, we are focusing on managing our product pricing accordingly.”

Huhtamaki: “Continued focus on operational efficiency and pricing actions to mitigate input cost inflation.”

Kemira: “To mitigate the cost pressure, we are continuing our active pricing actions and we are working hard to capture growing market demand in order to increase sales volumes.”

Latour: “Component shortages, supply chain disruptions and increased raw material prices have affected our companies to varying extents. Product prices have been increased to compensate for rising raw material prices, not least that of steel.”

Nibe: “Due to the dramatic price increases affecting us, we also had to adjust our own prices, although with a slight delay.”

Saab: “We continue to have a close dialogue with our suppliers to mitigate the effects.”

SKF: “Continued headwinds in the form of negative currency impact and rising input costs. Through mitigating actions we have been able to compensate for approximately 50% of this cost increase.”

Thule: “To compensate the cost increases, we have introduced, and already partly implemented, price increases in two steps.”

Tikkurila: “We expect that raw material inflation and some supply constraints will continue during the second half of 2021. We will maintain focus on serving our customers to the best of our capabilities under the supply constraints, while maintaining our profitability with smart margin management and targeted pricing changes to offset inflation.”

Trelleborg: “The margin was negatively affected by the rapid and strong price rise for raw materials and partly by the sales mix. Price adjustments to customers were implemented and will gradually offset the higher raw materials prices.”

UPM-Kymmene: “UPM will continue to manage margins with product pricing, optimising its product and market mix, efficient use of assets as well as by taking measures to improve variable and fixed cost efficiency.”

Vestas: CEO Henrik Andersen said during a conference call after the wind turbine maker cut its 2021 guidance in response to higher costs and supply constraints: “It’s mitigation down to a single asset and down to a single shipment.”

YIT: “Cost inflation of construction materials has started accelerating and the price pressure is expected to continue… The mitigation actions include pricing as well as contractual and procurement practices.”