KMB Kimberly Clark Corp

KIMBERLY-CLARK

Currency Fluctuation Weighs on Results

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%.

--Sharon Terlep and Austen Hufford

HUAWEI TECHNOLOGIES

Margin Shrinks As Investment Rises

HONG KONG -- Huawei Technologies Co. said Monday that its revenue rose 40% in the first half of the year, but its operating margin shrank as the Chinese technology company increased investment on its smartphone business.

The world's third-largest smartphone maker by sales, behind Samsung Electronics Co. and Apple Inc. , is trying to challenge the two companies not only in China but increasingly in overseas markets such as Europe and the Middle East.

Huawei, which makes handsets as well as networking equipment such as base stations, said its revenue rose to 245.5 billion yuan ($36.7 billion) for the six months through June from 175.9 billion yuan a year earlier, while its operating margin shrank to 12% from 18% in the first six months of 2015. Huawei didn't disclose its net profit.

"The modest reduction in operating margin during the period is mostly the result of increased investment to support future growth," a spokesman for Huawei said.

Still, Huawei grew at a faster pace than last year: Its revenue growth in the first half of 2015 was up 30% from the same period in 2014.

"We are confident that Huawei will maintain its current momentum, and round out the full year in a positive financial position backed by sound ongoing operations," Huawei Chief Financial Officer Sabrina Meng said in a news release.

The results came as demand for network upgrades at telecommunications carriers are slowing, with more clients already using fourth-generation wireless networks. Still, Huawei has been trying to sell more software and services to carriers that have already installed base stations and other hardware equipment. Such efforts appear to be paying off as Huawei's revenue from its business for carriers continues to grow, analysts said.

Huawei didn't disclose a revenue breakdown by business segment. The company's smartphone business has been growing rapidly over the past few years as it expands in European markets such as Italy and Spain as well as the Middle East, Africa and Latin America.

In the first quarter, Huawei's smartphone sales rose 59% to more than 28 million units, while its global market share increased to 8.3% from 5.4% a year earlier, according to data from research firm Gartner. Samsung's market share in the quarter was 23%, followed by Apple's 15%.

Despite its expansion in many parts of the world, Huawei has struggled to build a foothold in the U.S., where its networking-equipment business has effectively been banned after a 2012 congressional report recommended that U.S. carriers avoid using the Chinese company's gear amid concerns it could be used by Beijing to spy on Americans.

Huawei has denied the allegations.

Huawei's smartphone business also has only a minor presence in the U.S., where it has sold some handsets online.

--Wayne Ma and Juro Osawa

ANGLO AMERICAN PLATINUM

Low Metals Prices Slam Earnings

JOHANNESBURG -- Anglo American Platinum Ltd., the world's top producer of the precious metal, said Monday that low metals prices and a tax adjustment hit its earnings hard in the first half of 2016.

The Johannesburg-listed miner reported a profit of 938 million South African rand ($65.4 million) for the six months ended June 30, down 62% from the same period a year earlier.

Like other South African platinum producers, Amplats -- a majority-owned unit of globally diversified miner Anglo American PLC -- has been hammered by labor issues and low prices, which have driven away investment. And the industry now faces another round of wage negotiations, set to begin any day. A wage battle between platinum companies and miners' unions led to a five-month strike in 2014, the country's longest-ever. Platinum output plummeted 15%, hitting miners' bottom lines and slowing broad economic growth, which is expected to be flat this year.

"The only thing we do know is our business is cyclical," Chief Executive Chris Griffith told The Wall Street Journal in an interview on Monday . "We've addressed some of the fundamental issues. I think we're going to be very well placed [when the cycle turns up]. We're going to make a lot of money."

Amplats shares on the Johannesburg Stock Exchange were down 1% at 385.25 rand a share in early trade Monday. Still, the stock has gained 51% over the last 12 months, on the back of rising platinum futures prices, a weak South African rand and off a very low base.

The company reported headline earnings, which strip out certain exceptional and one-off items, of 1.04 billion rand for the first half of 2016, down 58% from the same period in 2015, in line with the company's previously announced guidance.

Amplats has previously said that the decrease in profit is primarily due to an after-tax gain of 1.6 billion rand booked during the first half of 2015, thanks to an adjustment to metal inventory levels, as well as low metal prices during the first half of 2016. The company's average U.S. dollar basket price per platinum ounce sold fell 24% in the first half of 2016 to $1,632 from $2,157 in the first half of 2015.

Still, all mining operations continued to be cash flow positive, and during the first half of 2016, Amplats reduced net debt 23% to 9.92 billion rand. Amplats also reaffirmed its production guidance for the year, and said it expects platinum production to come in at the upper end of the guided range of 2.3 million to 2.4 million ounces.

Refined platinum production fell 8.2% to 1.01 million ounces in the first six months of the year, while total platinum production rose 1.8% to 1.15 million ounces, the company said. However, overall metal prices continue to present a challenge for the company.

Platinum futures are up 21% since the start of the year, but prices are still far lower than they were during the first half of 2015. If prices stay where they are in the second half of 2016, though, the company's full-year prices should be up on 2015, Mr. Griffith said. But, "it's still not shooting the lights out," he added, and that dollar price increase for platinum could be offset by a stronger local rand currency.

As a result, Amplats is continuing to restructure its operations and is in the process of selling its Rustenburg assets, and continues to look for a buyer for its Union mine, as well as an exit from its joint ventures at the Bokoni, Pandora and Kroondal mines. The company's Twickenham project was also put on care and maintenance in the first half of the year.

"We've advanced disposals of noncore assets," Mr. Griffith said on a call Monday. The sale of the company's Rustenburg assets to Sibanye Gold Ltd. is expected to close by the end of 2016, Mr. Griffith said. In addition, a party interested in the company's Union mine is currently completing due diligence on the assets, he said.

After cutting about 15,000 jobs since 2013, Amplats plans to shed about another 20,000 of its remaining 44,000 jobs through its sales of Rustenburg and Union, leaving it with leaner, more mechanized operations. An underground mechanized operation uses about one third the labor of a traditional platinum mining operation, Mr. Griffith said.

"We are absolutely adamant that we are not going to have unprofitable ounces going to the market," Mr. Griffith said.

--Alexandra Wexler

AMSTERDAM -- ROYAL PHILIPS

Savings and Sales Contribute a Boost

AMSTERDAM -- Royal Philips NV said Monday that cost-savings and strong sales delivered a boost to second-quarter earnings as the Dutch firm seeks to reposition itself as medical technology company,

Adjusted earnings before interest, taxes and amortization were EUR544 million ($597 million), up 9% from the same period last year, beating market expectations.

Comparable sales, which are corrected for currency swings, rose 3% to EUR5.9 billion, while the adjusted Ebita margin rose to 9.3% from 8.4%.

Shares of Philips rose by 2.8% in Amsterdam, having gained 3.8% so far this year.

It was Philips' first earnings report since the May initial public offering of its lighting division, in which it still owns a stake of roughly 70%. The company has shifted to selling health-care products and technology, which it believes offer better long-term growth prospects. It competes with corporate giants like Siemens AG and General Electric Co.

Philips said the health-care technology operations, made up of three divisions, recorded a 5% rise in comparable sales in the quarter.

Growth was strongest at the consumer-oriented Personal Health unit, where comparable sales increased by 9%, driven by strong sales of electric toothbrushes and interactive sleep-therapy devices.

Order intake of medical-equipment like ultrasound scanners fell 1% in the quarter, which the company largely blamed on the lumpiness of its order book.

In an interview, Chief Executive Frans van Houten said the results provided fresh evidence that Philips' strategy to contain costs and market innovations at a greater speed is paying off.

He said he expects the positive trends to continue and that innovations in both the consumer and hospital segment could further boost sales and order intake in the remainder of the year.

An example of a successful innovation is the OneBlade, a beard-styler that looks to tap into the popularity of facial hair, Mr. van Houten said.

Mr. van Houten maintained his profit guidance for the year but expressed concerns of growing uncertainties caused by Britain's vote to leave the European Union and the recent wave of terror attacks. He also described the coming U.S. presidential election as "a risk" that is being closely monitored.

"It looks like the election will become a tight race," he said. "There are significant differences on policies [between the candidates] which could influence health-care, trade treaties and the wider U.S. economy," he said.

Any changes to U.S. health-care policies would have a significant impact on Philips. The Dutch company generates roughly one-third of sales in North America, making the region its most important market.

--Maarten van Tartwijk

(END) Dow Jones Newswires

July 26, 2016 02:49 ET (06:49 GMT)

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