Kimberly-Clark posts strong Q4 but outlook is weaker

By Simon Pitman

- Last updated on GMT

Related tags Personal care sales Currency

Kimberly-Clark posts rising sales and profit for its Q4 on strong personal care sales but the company’s outlook is weakened by the forecast of slow recovery for paper-based goods.

Sales rose by 8.4 percent for the quarter to $4.98bn, representing a rise in volumes of 2 percent, boosted by a particularly strong performance by both the company’s personal care and health care divisions.

Breaking this figure down, sales in the mainstay personal care division grew by 11.5 percent to $2.13bn, which represented a 5 percent increase in sales volumes.

The company said that its personal care sales during the quarter were impacted by higher selling prices and the positive impact of currency exchange rates, while the product mix impacted the performance negatively by 1 percent.

US results hold steady, while other markets boom

On a regional basis personal care sales grew by 1 percent in the US market, while they were up by 10 percent in Europe, mainly on account of the lower exchange rate the dollar had against most foreign currencies during the quarter.

Likewise the sales were also helped by the company’s double digit growth in key developing markets, specifically Latin America, Eastern Europe, Asia, Africa and the Middle East.

Net income increased by 17.4 percent to $492m, compared to $419m for the corresponding quarter last year, a figure that was mainly driven by a 15 percent improvement in operating profit.

Growing sales despite the difficult economic climate

Company CEO Thomas Falk attributed the strong performance to the fact that it had managed to grow organic sales in the face of a difficult retail environment, while also managing to cut costs.

“We also continued to make progress with our targeted growth initiatives, particularly in our K-C International business”​ he said, drawing attention to the company’s strong overseas performance.

For the full year 2009 the company recorded sales of $19.1bn, a fall of 1.5 percent compared to the €19.4bn recorded in 2008, while net income increased by 11.2 percent to $1.88bn.

Outlook likely to be impacted by paper products and Venezuela

Looking ahead, the company said that it is evaluating the impact that the newly introduced currency devaluation in Venezuela will have on its business operations there and is also expecting that the recovery in sales of its paper-based products is likely to be slow in 2010 as consumers have switched to cheaper products.

Kimberly-Clark says it still expects organic sales to grow in the range of 3 – 5 percent in 2010, while net earnings per share are expected to be in the mid- to high-single figure range.

However, analysts said that the outlook was below their expectations and share prices dipped 3 percent on pre-market trading following the results announcement.

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