Kimberly-Clark Hurt by Currency Rates -- Update
July 25 2016 - 12:13PM
Dow Jones News
By Sharon Terlep and Austen Hufford
Kimberly-Clark Corp. took a hit from currency fluctuations,
which weighed on its quarterly results, but Chief Executive Thomas
Falk said that the worst has past.
The maker of Kleenex tissues and Huggies diapers reported lower
sales across its divisions with currency moves shaving 4% from its
top line. Total sales slipped 1.2% from a year earlier to $4.59
billion while organic sales -- which excludes currency rates --
rose 3%.
The company said the negative impact of weak currencies outside
the U.S. should be less severe than initially forecast for the rest
of 2016.
"I don't know if I can call the top or the bottom, but we are
encouraged to see that it appears to be less negative," Mr. Falk
said in an interview, noting that Russia and Brazil in particular
have been improving.
Shares of the company fell 1.8% in morning trading to
$132.26.
Kimberly-Clark, like other consumer product rivals, had targeted
emerging markets, such as Brazil and Russia, to help it counter
sluggish growth in developed markets. But higher inflation and
political turmoil has hurt demand. About half of Kimberly-Clark's
sales are outside the U.S.
The Dallas personal-care company now expects full-year organic
sales growth at the low end of its previously released range of 3%
to 5% because of lower-than-expected benefits from price
increases.
The company now says fallout from currency fluctuations will
have a 4%-to-5% negative effect on sales and operating product,
instead of the previously forecast 5% to 6%.
The company swung to a profit of $566 million from a loss of
$305 million in the same quarter a year ago. Profit was helped by
organic sales growth, lower expenses and a lower effective tax
rate. In addition, the prior-year quarter included
pension-settlement charges.
The company cut marketing, research and general expenses by
2.5%.
In its personal-care unit, the company's largest, sales fell
1.2% to $2.28 billion as changes in currency rates cut sales by 6%.
Volumes increased 6%. In consumer tissue, sales were down just 0.3%
to $1.49 billion on currency rates and unfavorable product mix
changes. Volumes increased 3%.
Write to Sharon Terlep at sharon.terlep@wsj.com and Austen
Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 25, 2016 11:58 ET (15:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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