Tags: US | Earns | Kimberly | Clark

Kimberly-Clark Cuts Guidance After Net Falls 19 Percent

Tuesday, 26 Oct 2010 10:22 AM

Consumer products maker Kimberly-Clark Corp.'s third-quarter net income fell 19 percent on higher costs to make its tissues and diapers, prompting the company to cut its guidance for the year.

Shares of the maker of Huggies diapers and Kleenex tissues fell more than 3 percent in premarket trading Tuesday.

The company said its unit that serves businesses in North America continued to hurt because of high unemployment, which leads to emptier offices and less demand for tissue.

The company said it earned $469 million, or $1.14 per share in the three months ending Sept. 30. That's down from $582 million, or $1.40 per share, last year.

Revenue rose 1 percent to $5 billion.

Results missed expectations. Analysts predicted the company to earn $1.28 per share on revenue of $5 billion, according to Thomson Reuters.

Shares fell $2.47, or 3.7 percent, to $64 in premarket trading.

The Dallas company has been tweaking its products and prices to keep people buying its Cottonelle tissue, Pull-Ups, Kotex and Depends amid the downturn. It faces competition from store brands, which cost less. Its profits can also be hurt if it offers too many promotions, which prompt customers to buy but weaken selling prices.

Costs have been an issue, too, in recent months and were up $265 million in the quarter. The rise was primarily from fiber, but also other inputs including polymer resin and oil-based materials.

The company said these high costs won't be going away. It now estimates inflation for materials to be in the high end of its prior range of $700 million to $800 million.

Kimberly-Clark also narrowed its outlook for revenue this year to 3 percent growth, the bottom end of its prior range of 3 percent to 5 percent. The company said taking into account results for the first nine months, it expects its volume growth to be lower because of the weak economy in North America.

During the quarter, personal care product revenue grew 2.4 percent around the world and rose 4 percent in North America. But net selling prices fell 1 percent because of promotions. The company said feminine care products and adult care grew in the double digits.

Revenue from the company's unit that sells to businesses fell 3 percent overall, with volume down 3 percent. In North America, demand was weakened again by high unemployment and office vacancies. In Europe, business revenue fell 12 percent, including an 8 percent drag from currency. Revenue generated abroad can translate back into fewer dollars, depending on exchange rates.

Kimberly-Clark now expects earnings per share to range from $4.60 to $4.70 this year, down from its prior guidance of $4.80 to $5, which was given in July. Last year the company earned $4.52 per share.

Analysts expect the company to earn $4.83 this year, according to Thomson.

© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

   
1Like our page
2Share
Companies
Consumer products maker Kimberly-Clark Corp.'s third-quarter net income fell 19 percent on higher costs to make its tissues and diapers, prompting the company to cut its guidance for the year.Shares of the maker of Huggies diapers and Kleenex tissues fell more than 3...
US,Earns,Kimberly,Clark
468
2010-22-26
Tuesday, 26 Oct 2010 10:22 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved