WD-40 asks for more price hikes, confident of sales growth

Aussies raided the shelves for WD-40 through Covid-19 lockdowns, and the company tips sales will lift again despite price hikes.

Hardware brand WD-40 saw its cans of degreasers and cleaners stripped from the shelf through the pandemic, with strong sales growth pushing into 2023.

WD-40, known for its popular range of cleaners and lubricants, will ask customers including the Bunnings and Mitre 10 hardware chains to increase sales prices as it deals with an increase in the cost of aerosol cans and chemicals.

The price hikes follow a 7 to 8 per cent lift in Australia last year, although the US company believes its won’t be tarnished.

Sales of WD-40 degreasers rose strongly through Covid-19 lockdowns as home projects became popular with latest financial accounts for the hardware brands operations in Australia showing sales up 6.8 per cent in the 12 months to August 2022. That accelerating to 12 per cent in the first quarter of 2023.

This year, WD-40 will launch a new marketing campaign urging buyers to repair, not replace home furnishing and equipment.

“From our point of view, things are still strong, people are still out there doing DIY (projects) and while the pandemic has calmed down and we are all back to pretty much normal, we are still seeing good uptake of repairing and maintenance products,” WD-40 Asia Pacific managing director Geoff Holdsworth told The Weekend Australian. “All of our customers are doing well. Certainly in that maintenance area. Our major focus globally and Australia and Asia Pacific continues to be that maintenance area, with WD-40, multi use product being number one and our specialist range supporting that too.”

Accounts filed with the Australian Securities and Investments Commission show a lift in sales to $30.9m in 2022 from $28.9m in 2021, with profits rising from $2.12m to $2.53m.

In a presentation to investors in the US this month, WD-40 chief executive Steve Brass said the company expected maintenance sales to continue into 2023 despite economic challenges.

Its operations in Asia Pacific, which includes its large Australian business, now accounted for 14 per cent of global sales and was targeting compound annual growth rates of 10 to 13 per cent.

Inflationary pressures were a handbrake on earnings growth with the higher cost of aerosol cans squeezing gross margins by as much as 360 basis points, while the inflated cost of chemicals had shaved 330 basis points with other inputs such as warehousing and freight slicing margins by another 300 basis points.

“We are looking at putting prices up, and we are actually going through that at the moment as we speak,” said Mr Holdsworth. “We put prices up 12 months ago and we are looking at going again.”

Over the last year WD-40 globally has been able to claw back as much as 860 basis points in margins from price increases.

But Mr Holdsworth was confident that dispute a lift in shelf prices for the WD-40 range it would continue to be a strong brand in demand from consumers and tradies. This would be bolstered by a new campaign to help educate consumers that instead of shelling out new money for home furnishings and equipment they could instead use WD-40 to repair these items – helping to save the home budget as other costs of living rise.

“We are instigating a program about ‘repair don‘t replace’ and I think looking forward, just from a marketing perspective, that’s really what we are pushing now which is go and repair it, don’t replace it,” he said.

“We are primarily targeting this at homeowners but also trades, if you have a gate, don’t replace it, you can use WD-40 to repair it, and that will be a global initiative,” Mr Holdsworth told The Weekend Australian.

“And if you look back in history when there has been global downturns we haven’t been overly affected … and often what we find is through a downturn we can normally get through it because people are repairing rather than replacing and buying WD-40 to help them through.”