Kimberly-Clark 4Q Net Down 19% On Continued Cost Pressures

Kimberly-Clark Corp.'s (KMB) fourth-quarter earnings fell 19% as higher costs again put a damper on the company's improved sales, particularly in its crucial personal care business.

The company, whose products include Huggies diapers, Scott paper towels and Kleenex tissues, also offered a conservative outlook for its new fiscal year. For the year, the company predicted a per-share profit of $5 to $5.15 on a flat to 1% sales increase. Analysts polled by Thomson Reuters currently expect a per-share profit of $5.24 on $21.21 billion in sales, a 2% increase.

Weak demand for baby products in a still-cautious consumer environment has been a major challenge for Kimberly-Clark, which attributes nearly one-quarter of its sales to diapers.

Chief Executive Thomas J. Falk said Tuesday the company's bottom-line performance in 2011 was constrained by higher-than-expected cost inflation and soft demand in portions of the developed markets.

"Looking ahead to 2012, we expect economic conditions to remain difficult in the near term, particularly in developed markets. And while we expect a much more benign commodity cost environment, foreign currency exchange rates remain volatile and should be a headwind this year," Falk said.

For the fourth quarter, Kimberly-Clark reported a profit of $401 million, or $1.01 a share, compared with $492 million, or $1.20 a share, a year earlier. Excluding restructuring costs, per-share earnings came in at $1.28 a share, just short of the $1.30 expected by analysts.

Sales edged up 2% to $5.18 billion. Analysts were looking for revenue of $5.22 billion.

Gross margin narrowed to 29.8% from 32.4% as the cost of products sold rose 5.9% from a year earlier.

Sales at the personal-care segment, the largest by revenue, inched up 1.9% to $2.21 billion. Operating profit in the segment, however, fell 19% to $341 million due to input cost inflation, lower production volumes and increased expenses.

Shares were off 2.1% premarket to $72. The stock is up 15% over the past 12 months.

 
   -By Mia Lamar, Dow Jones Newswires; 212-416-3207; [e-mail]