Rising Costs Push Kimberly-Clark To Lower Q4 Profit
DALLAS (AP) – Kimberly-Clark Corp., the maker of Kleenex tissues, Huggies diapers and other household goods, is still waging a battle against rising costs that pushed its fourth-quarter profit down 19 percent.
The company also offered a 2012 adjusted earnings forecast below Wall Street’s expectations. Its shares fell $1.62, or 2.2 percent, to $71.90 in premarket trading on Tuesday.
Like many companies, Kimberly-Clark is struggling with higher costs for oil, wood, pulp and other materials that it needs to make and transport its products. It raised prices on certain products to help offset some of the expense, but must tread cautiously with price hikes to avoid turning off budget-minded shoppers.
The Dallas-based company continues to face soft demand in North America, as high unemployment and uncertain economic conditions keep many consumers focused on buying basic products on an as-needed basis.
Kimberly-Clark said Tuesday that it earned $401 million, or $1.01 per share, in the fourth quarter. That compares with profit of $492 million, or $1.20 per share, a year ago.
Excluding restructuring costs in its pulp and tissues segment, adjusted earnings were $1.28 per share, which fell short of the $1.30 per share that analysts surveyed by FactSet expected.
Revenue for the quarter ended Dec. 31 climbed 2 percent to $5.18 billion from $5.08 billion on higher prices and sales volumes, but missed Wall Street’s $5.21 billion estimate.
Sales of personal care items fell approximately 5 percent in North America in the quarter. While Kimberly-Clark raised prices on infant and child care goods, it was not enough to overcome increased promotions.
Total sales for the personal care division edged up 2 percent to $2.2 billion. Consumer tissue segment sales were essentially flat at $1.7 billion, while the health care unit’s sales rose 10 percent to about $420 million, partly on sales of exam gloves and surgical products.
Kimberly-Clark said its quarterly tax rate was 29.6 percent compared with 26.7 percent in the prior-year period. Excluding the pulp and tissue restructuring actions, the tax rate was 29.2 percent.
Full-year earnings declined 14 percent to $1.59 billion, or $3.99 per share, compared with earnings of $1.84 billion, or $4.45 per share, in the previous year.
Adjusted earnings were $4.80 per share.
“Reflecting on the full year, bottom-line results were somewhat below our original goal for the year, mostly due to higher-than-expected cost inflation and soft demand in portions of the developed markets,” Chairman and CEO Thomas Falk said in a statement.
Revenue for 2011 increased 6 percent to $20.85 billion from $19.75 billion.
Looking ahead, Kimberly-Clark anticipates 2012 adjusted earnings between $5 and $5.15 per share, below the analysts’ average forecast earnings of $5.23 per share for the year.
Annual revenue is expected to be flat to up 1 percent, which would imply revenue of about $20.85 billion to $21.26 billion. Wall Street forecast revenue of $21.22 billion.
Falk cautioned that economic conditions will likely remain challenging this year in the near term, specifically in developed markets. While commodity costs are expected to be a lesser concern, Kimberly-Clark anticipates foreign currency exchange rates will continue to be volatile.
The company also said it expects to raise its dividend at a mid-single digit rate, effective in April.
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