Kimberly-Clark sales boosted by recovery and currency translations

Sales for the three month period came in at $4.8bn, compared to $4.5bn in for the same period in 2009. This figure represented organic sales growth of 2 percent, further boosted by a 5 percent gain from foreign currency exchange rates.

However, despite the positive impact of the organic sales growth and currency translations, net income fell by 4.6 percent to $411m, impacted by an increase in marketing spend, and an increase in the effective tax rate.

Strong growth in personal care division​

The sales figures were underlined by particularly strong growth in the company’s personal care division, rising 8.1 percent to $2.1bn, compared to a figure of $1.9bn for the corresponding quarter last year.

Like the group sales, those in the personal care division were positively impacted by currency translations of 5 percent, while sales volumes rose 3 percent, selling prices increased by 1 percent and product mix had a positive impact of 1 percent.

In North America, personal care sales grew by 4 percent, boosted by a 2 percent volume increase from the strong performance of brands such as Huggies Baby Wipes, and the extension of the U by Kotex line.

In Europe, personal care sales grew by 6 percent, which accounted for a positive currency exchange impact of 9 percent. Counterbalancing this, net selling prices declined by 2 percent, while product mix negatively impacted the figure by 1 percent.

In Asia, Latin America, the Middle East, Eastern Europe and Africa, personal care sales increased by 15 percent, impacted by positive currency translations of 9 percent and organic sales growth of 6 percent.

Solid start to the year​

Company CEO Thomas Falk described the results as ‘a solid start to the year’, underlining the growth in organic sales of 2 percent, while also stressing that cost saving initiatives and company reorganization initiated last year should continue to improve margins and profitability.

“In addition, we strengthened our brands by launching a number of innovations in the first quarter and by significantly increasing strategic marketing spend,”​ said Falk.

However, the modest organic sales growth in the first quarter prompted the company to downgrade its expectations for sales growth in 2010 from 5 to 6 percent to 4 to 6 percent.

On the other hand, the outlook for organic sales growth is more positive, with the company increasing its forecast for 2010 from 2 to 3 percent to 3 to 4 percent, while forecasts for volume growth rates remain the same at 2 to 3 percent.

Likewise currency translation rates are not expected to have the same positive impact enjoyed in recent quarters, with the impact expected to be around 0 to 1 percent in 2010, compared to earlier forecasts of 2 percent.

“Given recent input cost changes and expectations for additional near-term increases, particularly with pulp [diapers and tissue products], we are now experiencing significantly higher cost inflation in 2010 than previously estimated,”​ said Falk.

“So, we are aggressively looking for ways to increase revenue realization and focusing on generating incremental cost savings and controlling discretionary spending.”​