The Hedging Corner: It’s All About Margin – Part II


For strategic or competitive reasons, if you can't or don't want to pass along higher commodities' costs (resins, fuel, metals, etc.) to your customers, what are your reasons for not hedging or for hedging fearfully? Is it preferable to be in a product price-increase quandary like P&G, Unilever, and Colgate-Palmolive?

From Raising Product Prices Is a Margin Call (Wall St. Journal, April 28, 2011 issue): "Battered by rising costs for raw materials such as pulp, resin and fuel, and already running lean operations, these companies [P&G, Unilever, Colgate-Palmolive] have signaled in recent months that price increases are vital to protect profit margins. Staying the price-increase course may be tough, though. Consumers are in a bind: Gasoline prices are eating into household budgets even as food costs continue to rise....
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