IKEA owners see rising cost pressure after hitting profits

Stockholm-IKEA furniture brand owners said Wednesday that they would raise prices due to supply chain challenges until 2022 after reporting a decline in profits for the full year due to rising shipping and raw material costs.

Despite record demand as people spend more time at home due to pandemics, Inter IKEA Group’s pre-tax profit for supply in the store owner franchise is 16 in the 12 months to August. It decreased by% to 1.71 billion euros (1.98 billion dollars). Profit decreased by 4% compared to the pre-pandemic fiscal year 2019.

“The pandemic affected operating profit in 2009. The biggest reason was the surge in transportation and raw material prices in the second half of the fiscal year,” said private Interikea annually. It is stated in the summary.

The company, which makes money primarily by selling products to franchisees, had record retail sales of € 41.9 billion ($ 48.5 billion) in October, up 6% year-on-year and lockdown in 2019. Said that it increased by 1%. Consumers spend more at home than ever, despite a shortage of products.

“It was difficult to keep inventories in IKEA stores and warehouses. Supply chain disruptions have significantly reduced the availability of products that have not yet recovered. We expect this to continue into 2010. There are. “

Chief Financial Officer Martin Van Damme told Reuters that the spillover effects of the global supply chain crisis and high energy prices could last for quite some time.

“For us, 2010 will be a more difficult year with more challenges,” he said in an interview.

“Raw material shortages, pricing, and logistics issues. Growth will be difficult in 2010. Of course, we are planning and aiming for growth, but only in the supply chain. And it will be a lot of work for retailers. “

Mr Vandam said he expects supply-related costs to rise further this year.

Inter IKEA has stabilized product prices to retailers this year, but has flagged this year that it will pass on some of the higher raw materials and shipping costs to store owners.

“Under these difficult circumstances, we cannot continue to secure fixed prices for retailers, but we also plan to absorb some of the increased costs during FY2010,” he said.

Van Damme said store owners are free to decide whether or how much to give shoppers a higher price.

Anna Ringstrom