(Adds Chavez’s comments in third paragraph.)
Feb. 9 (Bloomberg) -- Venezuelan President Hugo Chavez ordered Procter & Gamble Co. and Coca-Cola Femsa SAB to cut prices by as much as 46 percent, saying he would seize the companies if they don’t comply.
A deodorant sold by Cincinnati, Ohio-based Procter & Gamble will now sell for 13.5 bolivars ($3.14), 24 percent less than its previous price, while a 5-liter bottle of water sold by Coca-Cola will cost 46 percent less at 12.45 bolivars, Chavez said today.
“They’re still going to make money, we’re not asking them to lose money, but the profit has to be rational, they can’t rob the people,” Chavez said on state television. “If one of these companies says that they can’t comply with this, there’s no problem, I’ll take the company and give it to the workers and we’ll produce at a lower price and still make profit.”
Chavez froze the price of 19 consumer and cleaning products late last year as he widened price controls to slow inflation that he says is fueled by capitalist speculation. Venezuela’s annual inflation rate was 26 percent in January, the highest of 78 economies tracked by Bloomberg.
Chavez said his government will soon announce the complete list of new prices being set as part of the first stage of the controls.
The list of products whose prices were frozen included toothpaste, toilet paper, bleach, shampoo, diapers and soap. That will affect consumer companies including Johnson & Johnson, Colgate Palmolive Co., Kimberly-Clark Corp. and Unilever NV.
Some retailers have stopped ordering products due to uncertainty over what they will be able to charge customers, Jon Moeller, chief financial officer of Cincinnati-based Procter & Gamble said in a Jan. 27 teleconference.
“We’re facing some market-specific impacts, including government pricing interventions being made in Venezuela,” Moeller said. “Because of the uncertainty leading up to an eventual announcement, some retailers have stopped ordering for fear that they will end up with inventory that costs more than the price the new laws may allow them to sell those inventories at.”
Colgate-Palmolive isn’t expecting to be able to raise prices in
Venezuela in 2012, Ian Cook, president of the New York-based
company said in a Jan. 26 teleconference.
“The guidance that we are giving in terms of our approach in 2012 is, obviously, compliant with that government regulation with no pricing, no new pricing,” Cook said.
The announcement of new price regulations in November sparked panic purchases by consumers and led to shortages of everything from coffee to toilet paper.
--Editors: Richard Jarvie, Robert Jameson
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