Commodities prices dent company profits High oil and commodities prices are starting to dent the profitability of the world's largest industrial and consumer goods companies, with businesses from Procter & Gamble in the US to BASF in Europe warning of a strong headwind. As companies release their results for the first quarter, executives are warning that rising raw materials prices, particularly oil, are now a problem. Commodities prices "remain stubbornly high," Jean-Marc Huët, chief financial officer at Unilever, the world's second largest consumer goods company, said. Thomas Falk, chief executive of Kimberly-Clark, the maker of Huggies nappies, added: "Most oil-based costs are tracking a little higher than we expected." Brent crude prices averaged $118.5 a barrel in the first quarter of the year, the second highest quarterly average, below only the March-June period of 2008. Oil rose above $120 a barrel on Tuesday after hitting a peak of $128 in March. The cost of oil, which feeds into petrochemicals and plastics, was up 10 per cent on average between January and March compared with the first quarter of a year ago on the back of supply disruptions and geopolitical fears about Iran. Morgan Stanley said that the oil spike of 2008 acted as a drag on equities only once oil rose above $120 a barrel. The bank said that traditionally consumer goods companies suffer the most during a surge in oil prices. Industrial and consumer goods companies have raised prices several times in the past year to counter rising oil and other commodities prices. But some said in conference calls with investors after releasing first-quarter results they were struggling to recover full cost increases due to weak economic growth and high un­employment in western countries. Kurt Bock, chief executive of BASF, the world's biggest chemical maker by sales, told investors "increased raw material costs could not be fully passed on in all business areas, which put pressure on our margins." Jon R. Moeller, chief financial officer at Procter & Gamble, the world's biggest consumer goods company, added that "higher commodity cost" was one of the reasons for lower-than-expected profits even as the company was raising prices. The impact of commodities was uneven, nonetheless, with some companies benefiting from lower prices on a few raw materials. The cost of aluminium fell in the first quarter compared with the same period of 2011, helping the food and drinks industry, which uses the metal for packaging and cans. Pulp prices, which have fallen by about 15 per cent since the middle of last year, also cut packaging costs in food and other sectors. US-based petrochemical companies benefited as the cost of natural gas, a key feedstock, hit a 10-year low.