Fitch Ratings said it has a stable outlook for the U.S. consumer
products industry in 2012, though growth in emerging markets will
slow, as more developed economies also see declines.
The ratings firm expects price-led 3.5% revenue growth for next
year, down from 5% in 2011. While gross margins should improve
slightly, the firm said there is likely to be a moderate squeeze on
operation margins and free cash flow.
"Emerging markets are critical for this industry given their
strong demand for industry products and positive GDP growth," said
Fitch Director Grace Barnett. "Yet growth in the emerging markets
is slowing and will not be enough to offset declines in the
sizeable revenues and profits generated from Europe and North
America."
Fitch said the ratings on Kimberly-Clark Corp. (KMB), Clorox Co.
(CLX) and Newell Rubbermaid Inc. (NWL) could be pressured if pulp,
resin and energy costs increase significantly. High costs for
resins and pulp weighed on the sector for much of 2011, but have
been stabilizing of late. However, Fitch noted that lower commodity
costs and a slow growth environment ripen the conditions for
another fiercely promotional environment.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; nathalie.tadena@dowjones.com;