Price Increases Not Keeping Up with Escalating Costs
Through April 27, 2005, PricewaterhouseCoopers' Manufacturing Barometer
interviewed 73 senior executives in large, multinational Industrial
Manufacturing companies about the first quarter business climate. The full
report is available at http://www.pwc.com/mb .
NEW YORK, June 1 /PRNewswire/ -- Rising oil prices are significantly
hampering the growth of U.S. industrial manufacturers, according to
PricewaterhouseCoopers' most recent Manufacturing Barometer survey. Nearly
half of the executives surveyed - 47 percent - cite rising energy prices as a
potential barrier to growth over the next twelve months. A majority of these
manufacturers - 59 percent - is passing through price increases, yet 41
percent of them reported shrinking gross margins during the most recent
quarter.
"Higher oil prices affect industrial manufacturers on multiple fronts,"
says Jorge Milo, U.S. leader of PricewaterhouseCoopers' industrial
manufacturing practice. "Raw material prices go up, energy costs increase to
operate their facilities, and distribution costs rise to transport their
products to their customers."
Far more of these oil-vulnerable companies reported higher costs, price
increases, and reduced margins:
- 71 percent of companies describing themselves as oil-vulnerable
reported rising costs in the prior quarter, compared to 44 percent of
those who did not describe themselves as oil-vulnerable.
- 59 percent of oil-vulnerable companies raised their prices, versus 39
percent of the others.
- 41 percent of oil-vulnerable companies saw their margins decrease,
versus 23 percent of the others.
Overall, large industrial manufacturers have lowered their revenue
expectations to 6.5 percent for the next 12 months, from their prior estimate
of 7.8 percent.
"Manufacturers must decide how much, if any, of these rising costs to pass
onto their customers," said Milo. "Many are attempting to do so, but
tightening margins indicate that end markets will only absorb so much. It's a
delicate balancing act."
PricewaterhouseCoopers' "Manufacturing Barometer" is developed and
compiled with assistance from the opinion and economic research firm of BSI
Global Research, Inc.
PricewaterhouseCoopers (http://www.pwc.com ) provides industry-focused
assurance, tax and advisory services for public and private clients. More
than 120,000 people in 139 countries connect their thinking, experience and
solutions to build public trust and enhance value for clients and their
stakeholders.
PricewaterhouseCoopers' Industrial Products practice
(http://www.pwc.com/ip ) is a global network of over 1,000 partners and 17,000
client service professionals who provide industry-focused assurance, tax and
advisory services to over 1,000 public and private companies in the aerospace
& defense, chemicals, forest & paper, industrial machinery, and metals
sectors.
Unless otherwise indicated, "PricewaterhouseCoopers" refers to
PricewaterhouseCoopers LLP, a Delaware limited liability partnership.
PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers
International Limited.
For more information about Barometer surveys, including recent economic
trend data and topical issues, please visit our
web site: http://www.barometersurveys.com
SOURCE PricewaterhouseCoopers LLP
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Related links:
http://www.pwc.com/mb
http://www.pwc.com http://www.pwc.com/ip
http://www.barometersurveys.com
CONTACT:
Jim Clayman of PricewaterhouseCoopers,
+1-636-405-1672, or jim.clayman@us.pwc.com ; or Jonathan
Tsucalas, +1-212-601-8267, or jtsucalas@porternovelli.com , for
PricewaterhouseCoopers
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