Bloomberg News

Kimberly-Clark Reduces High End of 2011 Profit Forecast

October 24, 2011

(Updates with CFO’s comment in eighth paragraph.)

Oct. 24 (Bloomberg) -- Kimberly-Clark Corp., the maker of Scott toilet paper and Huggies diapers, fell the most in a year after cutting the high end of its annual profit forecast amid lower demand in North America and some developed markets.

Kimberly-Clark declined 4.6 percent to $69.65 at the close in New York, the biggest drop since Oct. 26, 2010. The shares have gained 10 percent this year.

Chairman and Chief Executive Officer Tom Falk said the company is “not on track with all of our goals this year,” according to a statement today. The company said demand in some areas of North America and Europe was weaker-than-expected in the third-quarter.

Profit this year will total as much as $4.90 a share, reduced from a previous forecast of a maximum of $5.05, Kimberly-Clark said. Analysts projected $4.84 a share, the average of 15 estimates compiled by Bloomberg.

Falk said the company is expecting less commodity-cost inflation this year than previously forecast. In July, Kimberly- Clark more than doubled its estimate for raw materials inflation for this year, and said 2011 profit would “more likely” fall in the lower half of its projected range.

Operating Margins

Kimberly-Clark is also coping with lower birthrates, consumers trading down and a more competitive pricing environment, executives said today on a conference call.

Those factors helped push operating margins on personal- care products below the previous year, which may have worried some investors, said Jack Russo, an analyst with Edward Jones & Co. in St. Louis. He has a “hold” rating on the shares.

“We continue to see a cautious consumer,” Chief Financial Officer Mark Buthman said today in a telephone interview.

Third-quarter net income dropped 7.9 percent to $432 million, or $1.09 a share, from $469 million, or $1.14, a year earlier, the Dallas-based company said today. Excluding some items profit totaled $1.26 a share, matching the average of 14 analysts’ estimates compiled by Bloomberg.

Revenue at Kimberly-Clark, which generates about half of its sales from outside North America, rose 8.1 percent to $5.38 billion in the quarter.

--Editors: James Callan, Niamh Ring

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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