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Diversey announces 5% price increase in Europe by 1st January 2019
Diversey announced this week a 5% price increase across Europe, effective January 1st 2019, due to what it says are unforeseen and permanent cost increases.
Since late 2017, Diversey's business has been presented with significant cost increases in labour, energy, transportation and raw materials. These increases, it reports, have been due to strong inflation, capacity constraints, 'Force Majeure' supplier events and an increasingly stricter global regulatory landscape.
The company notes that since September 2017, the price of crude oil has increased by 25%, propylene by 25%, caustic soda by 24% and ethylene by 14%, while other feedstock prices - such as phosphonates and phosphoric acids - have also increased substantially. The outcome has been an unfavourable impact on the cost of the raw materials used to produce Diversey's products.
Unforeseen caustic soda plant closures, coupled with increased demand for the material, has led to a supply/demand imbalance, resulting in a large spike in caustic soda prices since the last quarter of 2017. More recently, unplanned plant downtime and 'Force Majeure' events in the fragrances market have resulted in significantly higher prices and supply disruption.
Freight costs have also increased, due to the development of dangerous goods transportation regulations, higher taxes and diesel costs, driver shortages and a strong overall economy.
"Though we continually focus on internal programmes to improve our cost position, the impact of the cumulative market increases in the past months, and the forecasted increases in the coming period, can no longer be mitigated solely by Diversey," said Gaetano Redaelli, global president of Diversey's Professional Division. Therefore, Diversey will be implementing price adjustments in Europe in the short term, which may range between 3 and 7% depending on the product category and the country."
Diversey reports that it remains committed to delivering smart and sustainable solutions which improve the efficiency of operations and reduce the carbon footprint of its customers.
1st November 2018