Increased Costs May Hit B2B Companies (CHD, FO, HELE)

Major B2B companies have posted good quarterly results. Jefferies & Co. Inc., in its weekly report, has stated that these companies have a tougher time ahead on account of rising input costs. Companies such as Church & Dwight Co. CHD, Fortune Brands FO and Helen of Troy Limited HELE have already warned that rising commodity prices and freight costs are likely to eat into their margins. Increasing prices to compensate for higher costs is not a viable option either, due to slack U.S. and European economies. However, in the last two quarters, eleven of the twelve companies included in the research universe improved their gross margins. The report has further stated that its coverage group outpaced the S&P 500 index and rose 4.7% however it lagged the Russell 2000, which rose 6.3%.