Profits make big jump at Kimberly-Clark

By Simon Pitman

- Last updated on GMT

Personal care and hygiene products provider Kimberly-Clark said
that profits jumped 64 per cent for its first quarter, on the back
of particularly strong sales in emerging markets and reduced costs
gained from restructuring.

The company has been struggling against rising commodity costs in recent quarters, but, although this is still presenting pressures, a healthier balance sheet in other areas of the business has boosted the bottom line. The company said that net income rose to $452m, up from $275m in the same period last year. This came on the back of sales that increased 7.8 per cent to $4.4bn. Speaking at a conference call to announce the results, chief executive Thomas Falk said that the continued rise in the cost of pulp was hitting the company's diaper and tissue product line, which meant that it was planning to increase prices. Falk said that he was nevertheless impressed by the progress the company's teams were making around the world from its Global Business Plan. "As a result, we delivered a solid improvement in operating profit, overcoming $80m of inflation while at the same time funding a stepped-up level of spending for strategic marketing,"​ he stated. The company is known for its Huggies diaper and Kleenex tissue brands, but in more recent years has become increasingly active in the personal care segment, which has likewise been one of the main driving force behind the increased sales. Indeed, during the quarter, sales of personal care products increased by 10.6 per cent, which was stressed by a sales volume increase in excess of 8 per cent. In Europe sales of personal care products increased by 12 per cent during the quarter, which the company said was entirely down to a favorable currency exchange rate, counterbalanced by the fact that net selling prices were down 1 per cent. Meanwhile in developing and emerging markets, sales rose 16 per cent, driven by a 12 per cent increase in sales volumes and currency benefits of 3 per cent. Sales growth was said to be particularly strong in Latin America as well as China and Russia. Falk said, looking ahead to the rest of the year, the first quarter had given him the confidence to believe that the restructuring scheme was going to plan, stating that commodity pricing pressures should continue to be offset by a strong overall performance. He added that adjusted earnings should increase by 5 - 8 per cent for the year as a whole, and that second quarter earnings would rise by 6 - 8 per cent.

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