Kimberly-Clark’s profit drops 9%
Published 8:55 pm Wednesday, October 22, 2008
NEW YORK — Kimberly-Clark Corp. saw its third-quarter profit decline 9 percent as the maker of Huggies diapers and Kleenex tissues paid more for raw materials and increased its marketing efforts. The company also cut its full-year profit outlook on Wednesday.
To help offset the higher commodities costs, Kimberly-Clark has raised prices on some of its products, such as facial tissue. In the third quarter, those costs rose to $250 million, an all-time high for the company.
Net income fell to $413.1 million, or 99 cents per share, from $453.1 million, or $1.04 per share, last year. Excluding charges to cut costs and streamline operations, earnings were $1.02 per share, up from $1.07 per share last year, which included a gain from a legal settlement.
Analysts surveyed by Thomson Reuters, who typically exclude one-time costs, expected profit of $1.01 per share on revenue of $4.99 billion.
The Irving, Texas-based company said revenue rose 8 percent to $5 billion from $4.62 billion, as sales of personal care products benefited from higher volumes and prices as well as foreign exchange rates. The company also raised prices on items that included Huggies diapers, Kotex tampons and Poise and Depend incontinence care products.
Kimberly-Clark has been “aggressively” raising prices on items to offset rising costs, which should boost margins in the fourth quarter, said chief financial officer Mark Buthman.
“We made progress so far with execution of our third-quarter price increases but it’s still early and we continue to watch promoted price points carefully,” he said.
Higher-than-expected commodity costs during the quarter surprised Goldman Sachs analyst Andrew Sawyer, who also said higher tissue prices hurt sales volume, which declined 7 percent during the quarter.
