DALLAS – Kimberly-Clark Corp., the maker of Kleenex tissue and Huggies diapers, said Thursday that fourth-quarter earnings grew 30 percent, fueled by strong sales of health care and personal products that offset higher prices for raw materials.
Sales rose 7.4 percent despite tough competition in the diaper aisle. But the company offered a 2007 profit forecast that disappointed some analysts.
Net income rose to $482.6 million, or $1.05 per share, from $371.1 million, or 79 cents per share, a year ago. Excluding several one-time costs, including charges tied to a restructuring that began two years ago, Kimberly-Clark said it would have gained $1.03 per share in the last three months of 2006.
Analysts, who exclude one-time items from their calculations, had forecast a profit of $1.02 per share, according to a survey by Thomson Financial.
Sales rose to $4.31 billion, beating analysts’ $4.24 billion forecast and the $4.01 billion of a year ago.
The consumer-products giant said sales and profits were lifted by results in its health care and personal care segments. Officials said the bird flu scare helped sales of face masks, and new examination gloves proved popular, both boosting the health care business.
Cost-cutting measures helped offset an increase of about $90 million in costs for fiber, resins and energy.
The company said it expects adjusted earnings of 99 cents to $1.01 per share in the first quarter, and $4.10 to $4.20 per share for all of 2007, up from $3.90 per share last year. That guidance appeared to be barely in line with Wall Street, which expects $1 per share for the new quarter and $4.20 per share this year.
Bill Schmitz Jr., an analyst for Deutsche Bank-North America, said, however, that Kimberly-Clark’s outlook was helped by the inclusion of gains of 5 to 10 cents per share from synthetic fuel deals that were not part of most analysts’ figures.
Several analysts said that despite strong sales, Kimberly-Clark’s profit margins were still below expectations.
Christopher Ferrara, an analyst for Merrill Lynch, said restructuring saved more money than targeted and that Kimberly-Clark “continues to do what it can in a tough environment.” But he said profit margins were disappointing due to rising costs for pulp, which is used in tissues.
The company recently sold off most of its pulp mills, although it continues to operate both a pulp mill and a tissue mill in Everett.
In one of its biggest businesses, diapers, the company has been locked in a long price war with Procter &Gamble Co., which has tried to grab market share by discounting.
“It continues to be a competitive environment,” said Kimberly-Clark Chairman and Chief Executive Thomas J. Falk, but he added that the fight has shifted to improving the product instead of merely cutting prices, a development he welcomed. He also said high pulp costs might discourage price wars.
Shares slipped 50 cents to $68.97 – still near their 52-week high of $69.97 hit this week – in afternoon trading on the New York Stock Exchange.
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