DALLAS (AP) – Consumer products maker Kimberly-Clark Corp. said Monday that its second-quarter profit fell 18 percent, dragged down by higher commodity costs and an increased tax rate.
The Dallas company also said it expects 2011 adjusted earnings will likely be in the lower half of its previous range, but raised its full-year revenue guidance.
Its shares fell 65 cents to $67.25 in premarket trading.
Like many companies, Kimberly-Clark has seen costs for the materials it uses continue to climb and has raised prices in an attempt to alleviate some of the pressure.
Chairman and CEO Thomas Falk said in a statement that the commodity cost environment has gotten worse over the past three months, but that the company was keeping its full-year outlook because it planned to lower overhead costs and should benefit from favorable currency exchange rates.
But Falk said if input costs don’t moderate, it’s likely Kimberly-Clark’s 2011 adjusted earnings will be in the lower half of its range.
The maker of Kleenex tissues, Huggies diapers and other goods reported net income of $408 million, or $1.03 per share, for the period ended June 30. That’s down from $498 million, or $1.20 per share, a year ago.
Adjusted earnings were $1.18 per share. This surpassed the $1.14 per share that analysts surveyed by FactSet predicted.
Revenue rose 8 percent to $5.26 billion from $4.86 billion on higher sales volumes and increased prices. Wall Street expected $5.11 billion.
The company’s personal care unit reported a 7 percent increase in sales, but sales in North America declined 2 percent as demand for infant care and child care products remained weak and fewer infant care shipments were made to Canada. Sales increased 9 percent in Europe as better sales of baby wipes, child care products and other items offset lower diaper volumes. Kimberly-Clark’s international operations — which includes Asia, Latin American, the Middle East, Eastern Europe and Africa — posted a 19 percent rise in sales.
At the consumer tissue division, revenue rose 9 percent to $1.7 billion. North American revenue rose 5 percent, while European revenue increased 11 percent. K-C international’s revenue rose 14 percent.
The health care segment’s revenue rose 14 percent in the quarter, with medical supply volumes increasing by double-digits thanks in part to better sales of gloves and clothing.
The company’s tax rate climbed to 31 percent from 27.5 percent.
Kimberly-Clark maintained full-year guidance for adjusted earnings between $4.80 to $5.05 per share. Revenue is now expected to climb about 5 percent to 7 percent. The company’s prior forecast called for revenue to rise 4 percent to 6 percent.
Analysts expect 2011 earnings $4.85 per share on revenue of $20.73 billion.
Kimberly-Clark’s outlook accounts for anticipated higher costs for polymer resin, superabsorbent, adhesives and other packaging materials. The company said that costs for many of those materials have continued to climb even though oil prices have moderated somewhat over the past three months.
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