Kimberly-Clark is Bracing for More Quarters of Sluggish Sales -- Update
October 24 2016 - 11:48AM
Dow Jones News
By Sharon Terlep and Imani Moise
Kimberly-Clark Corp. is bracing for more quarters of sluggish
sales.
The maker of Kleenex tissues and Huggies diapers lowered its
financial forecasts Monday, sending shares lower as third-quarter
organic sales were flat and currency rates continued to erode
profits.
Chief Executive Thomas Falk said a pickup in sales isn't
imminent. "Every economic number seems to take the forecast down on
GDP growth," Mr. Falk said. "I don't expect it's going to snap back
right away."
Kimberly-Clark, like other consumer product rivals, had targeted
emerging markets, such as Venezuela and Russia, to help counter
sluggish growth in developed markets. But higher inflation and
political turmoil have challenged operations, even causing some
plants to halt production entirely.
Shares fell 3.1% to $115.80 in Monday trading. The stock has
fallen 11% in the past three months through Friday's close.
Kimberly-Clark reported that organic sales increased 3% in
developing and emerging markets but decreased in all other markets,
making growth flat companywide for the quarter. Foreign currency
rates reduced sales by more than 2% in the quarter.
Pricing fell in North America, in both personal care and
consumer tissue, amid ramped up promotions across the industry.
The Irving, Texas-based company dropped its current-year
forecast for organic sales growth, a metric that excludes the
impact of foreign currency rates, to 2% compared with its previous
expectation of growth between 3% and 5%. The company also narrowed
its earnings guidance to $5.95 to $6.05 per share compared with the
previous range of $5.95 to $6.15.
Overall for the quarter, Kimberly-Clark reported a 6.4% increase
in profit to $550 million from a year ago. Revenue fell 2.6% to
$4.59 billion, while gross margin rose to 36.4% from 35.7%
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
October 24, 2016 11:33 ET (15:33 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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