Libbey to boost prices 8%; cost of natural gas blamed
7/3/2008A stunning 65 percent increase this year in the price of natural gas, a key fuel used by factories making table glasses and dinner plates, has prompted Toledo's Libbey Inc. to raise its prices by about 8 percent, effective Aug. 18.
The company plans to reduce other costs, but the price increases are needed to offset its energy costs, Chairman John Meier said in a statement.
"The increases were made necessary by the unprecedented escalation of energy costs, especially natural gas," the firm said in a statement.
Many companies have raised their product prices in the past year, often because of higher costs for raw materials and fuel. Libbey raised some prices in November for its restaurant, hotel, and other institutional customers.
The firm reported a first-quarter loss this year of $3.5 million on sales of $187 million, attributed mostly to increasing costs for natural gas and a slowdown in the food-service industry.
Natural gas, the company said, amounts to about 9 percent of the firm's costs. It spent $60 million last year on the fuel at its six plants around the world.
Libbey, which observes its 120th anniversary this year, makes 120 million pieces of glassware at its near-downtown Ash Street factory, where natural gas heats the glass to 2,700 degrees. It also makes plates and utensils.
"We can control some of our costs, but we have no control over the price of natural gas," said Greg Geswein, vice president and chief financial officer.
The increases will affect Libbey's main food-service customer base, where it controls about 56 percent of the market. The rise in prices may be slightly higher in Mexico, where Libbey has a factory, the firm said.
Prices of Libbey products sold at retail stores also will increase, but the jump may not be as high, Mr. Geswein said. About a third of such store products in the country are sold by Libbey.
The firm expects to have $870 million in revenues this year.