By Anna Ringstrom

STOCKHOLM, (Reuters) – The IKEA Furniture brand’s owner announced Wednesday that it will raise prices to address supply chain issues well into 2022. This comes after the company reported a decline in its full-year profits due to increased transport costs and higher raw material costs.

Pretax profit for Inter IKEA Group (franchisor of store owners and in charge supply) fell to 1.71 Billion euros in August despite record demand. Comparable to the fiscal year before the pandemic, profit fell 4%.

The global pandemic impacted our operating income for FY21. Inter IKEA, which is privately held, said that the biggest reason for the decline in raw material and transport prices in FY21 was “the steep rise in transport costs in the second quarter of the financial year.”

Company, which makes most of its profits from the sale of products to its franchisees said October that retailers sold a record 41.9billion euros. That’s up 6% and 1% respectively from fiscal 2019, as locked-down customers spent more money than ever in their homes and even despite shortages.

It has been difficult to keep IKEA warehouses and stores stocked. The availability of certain products has been affected by supply chain interruptions. We are still trying to get it back. This trend is expected to persist well into FY22″, it stated on Wednesday.

Martin van Dam, Chief Financial Officer, stated to Reuters that the ripple effects from the global supply chain crisis could continue for some time.

In an interview, he stated: “FY22 will be more difficult for us with more challenges.”

It will prove difficult to grow FY22 due to the scarcity of raw materials and their high prices, as well as logistical issues. We plan to grow, it is something we do. However, it will be difficult for us and our suppliers to achieve it.

Van Dam indicated that he anticipates rising supply costs in the current fiscal.

Inter IKEA has maintained the same product price to retail customers throughout the year. However, it indicated that they would transfer some higher transport and raw material costs to their store owners for this fiscal year.

“Though we can’t continue to secure fixed prices to the retailers under these challenging conditions, we also plan to absorb part of the increased costs during FY22,” it said.

Van Dam explained that shop owners would have the freedom to decide whether higher prices should be passed on to their customers.

($1 = 0.8633 euros)