Personal care leads growth for Kimberly-Clark

By Simon Pitman

- Last updated on GMT

Dallas-based Kimberly-Clark has reported a significant increase in
its second quarter sales, marked by particularly strong personal
care growth in Europe and the emerging markets.

Total net sales for the period came in at $4.5bn, an increase of 8.2 percent, reflecting a broad-based organic sales growth of 5 percent or better across all of the divisions, including personal care, consumer tissue, professional and other associated businesses.

Net profits increased by 22.3 percent to reach $468.1m, which the company said was attributable to a combination of higher sales and the success of its restructuring program, which has allowed for significant cost reductions.

Likewise, a lower effective tax rate was also said to have attributed to the improved bottom line.

CEO Thomas Falk said, "In the second quarter, our teams continued to execute our Global Business Plan well, highlighted by particularly strong top-

and bottom-line performances in Personal Care and across developing and emerging markets."

The strong results encouraged the company to up its share guidance for 2007, stating that it now expects its earnings per share guidance to be in the $4.20 - $4.25 range, up from the $4.10 to $4.25 guidance given earlier on in the year.

Focusing on the personal care division, results for the quarter were boosted by positive currency gains on the back of a weak dollars, which helped to boost net sales by 3 per cent, backed up by overall organic sales growth of 6 percent.

This meant that overall personal care net sales were up 9.7 percent, further boosted by a stronger product mix and higher selling prices.

In the company's mainstay North American market personal sales were up 3 per cent, reflecting a 1 percent gain from increased prices and 2 per cent in sales volume, but the gains were said tohave been offset by lower child care and feminine hygiene sales.

Meanwhile, in Europe, personal care sales were up 11 percent, mainly from currency gains of 9 per cent, but likewise there was a 4 percent increase in sales volume.

In the developing and emerging markets, the company reported a sales increase of 21 percent, driven by a 14 percent increase in sales volume and a 6 percent gain from positive currency exchange rates.

The main thrust of this increase came from most of the Latin American markets, while both Russia and China also figured significantly.

Kimberley-Clark centers on marketing tissue and diaper brands such as Pull Ups, Huggies and Kleenex and also markets a number of associated personal care products, including skin care and wipes, together with washroom products sold under its Professional division.

As part of its restructuring program, the company also announced a share buy-back scheme by signing an accelerated share repurchase agreement with Bank of America, which will see it buy back 29.6 million shares for $2 billion, bring the fiscal buyback for 2007 to a total target of $2.8bn.

"With our targeted growth initiatives and strong financial discipline, we have the right strategies in place to drive sustainable growth.

The additional leverage aligns our capital structure with our Global Business Plan strategies," said Falk.

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