Kimberly-Clark Beats Expectations Despite Currency Volatility--Update
October 21 2015 - 4:26PM
Dow Jones News
By Serena Ng And Chelsey Dulaney
American consumers' frugal streak is showing few signs of
fading.
Kimberly-Clark Corp., the maker of Huggies diapers and Kleenex
tissues, Wednesday reported higher North American sales volumes,
thanks in large part to promotional activities and coupons that
drew more shoppers to its brands.
Chief Executive Tom Falk said shoppers responded well to digital
coupons and price promotions on bulk purchases of items like paper
towels and facial tissue. "If you have more paper towels and
tissues in your pantry you're likely to consume more," he said.
The Dallas-based company's overall third-quarter sales fell 7%
to $4.7 billion, mainly the result of many foreign currencies
weakening against the U.S. dollar. But the decline was less than
Wall Street analysts forecast, and Kimberly-Clark's organic sales,
which exclude acquisitions, divestments and the impact of currency
moves, grew 5% on the back of growth from emerging markets and
North America.
The results helped send Kimberly-Clark shares up 1% to $118.19
in late Wednesday trading. So far this year, the stock is up
2.3%.
Currency swings, however, are likely to reduce the company's
bottom line by as much as 25% this year, a bigger hit than
previously anticipated, Chief Financial Officer Maria Henry said.
For the third quarter, Kimberly-Clark reported an 8% decline in net
profit to $517 million, while over the first nine months of 2015
profit was down 58% from a year ago to $680 million.
In the baby diaper business, Huggies has been trying over the
past year to claw back U.S. market share it lost last year to its
chief rival, Pampers, made by Procter & Gamble Co.
Third-quarter sales volumes of Huggies diapers rose in low
double-digit terms following the relaunch this year of the brand's
mainline Snug and Dry diapers at slightly lower prices.
Mr. Falk said Huggies's share has improved modestly by about 1
percentage point in the year to date, but Kimberly-Clark in the
recent quarter shipped higher volumes of diapers to retailers who
wanted to stock more merchandise after some of their stores ran
out.
The company also sold more Kleenex during the recent
back-to-school shopping season, thanks to the brand's popularity on
school-supply lists distributed by teachers across the U.S.
Through the first nine months of 2015, Kimberly-Clark's sales
were up 4.5% organically. The company narrowed its full-year
organic sales growth forecast to between 4% and 5%, from a previous
range of between 3% and 5%.
The company also sees currency declines cutting between 10% and
11% off sales for the year, compared with its previous guidance for
a 10% impact.
Write to Serena Ng at serena.ng@wsj.com and Chelsey Dulaney at
Chelsey.Dulaney@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 21, 2015 16:11 ET (20:11 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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