By Angela Chen And Serena Ng
Kimberly-Clark Corp. reported a 4% decline in first-quarter
sales, with the stronger dollar and increased competition in its
diapers business weighing on its results.
Despite the drop, the results beat Wall Street forecasts.
Kimberly-Clark's shares rose 4.5% to $112.22 in afternoon
trading.
The Dallas-based maker of Huggies diapers, Kleenex tissue and
Cottonelle toilet rolls said sales, excluding the impact of
currency swings, rose 5%, driven by strong growth in developing
markets such as China and Brazil.
In the U.S., Kimberly-Clark's Huggies business has struggled
over the past year, as parents have been skewing to the high and
low ends of the price spectrum. That trend has played into the
hands of rival Procter & Gamble Co., whose premium Pampers and
low-end Luvs are gaining share.
Kimberly-Clark recently relaunched its mainline Huggies Snug and
Dry diapers, adding improvements such as better absorbency and
lower leakage rates, and is working with retailers to display the
products more prominently. Prices of its diapers will also be
slightly lower thanks to more frequent promotions, Chief Executive
Tom Falk said Tuesday.
Currency headwinds continue to be a challenge. The weakening of
many foreign currencies against the U.S. dollar shaved
Kimberly-Clark's sales by 9%, and reduced its earnings by 19%. The
impact to the company's bottom line was greater because its foreign
operations buy many raw materials such as pulp that are denominated
in U.S. dollars.
With the Federal Reserve poised to increase interest rates later
this year, "I think the strong dollar is going to be with us for a
while," Mr. Falk said.
In the latest quarter, sales at its biggest segment,
personal-care--which includes Huggies and is the largest segment by
revenue--fell 3.1% to $2.31 billion, weighed down by currency
rates. Sales in North America fell 2% in the segment, hurt by lower
volumes for Pull-Ups training pants and Huggies diapers.
In the adult incontinence business, Kimberly-Clark is also
facing new competition from P&G, but Mr. Falk said the company
didn't lose a lot of market share.
Overall, Kimberly-Clark's first-quarter earnings fell 13% to
$468 million from a year earlier. Sales fell to $4.69 billion from
$4.89 billion.
Write to Angela Chen at angela.chen@dowjones.com and Serena Ng
at serena.ng@wsj.com
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