Kimberly-Clark Hurt by Currency Rates -- Update

By Sharon Terlep and Austen Hufford 

Kimberly-Clark Corp. took a hit from currency fluctuations, which weighed on its quarterly results, but Chief Executive Thomas Falk said that the worst has past.

The maker of Kleenex tissues and Huggies diapers reported lower sales across its divisions with currency moves shaving 4% from its top line. Total sales slipped 1.2% from a year earlier to $4.59 billion while organic sales -- which excludes currency rates -- rose 3%.

The company said the negative impact of weak currencies outside the U.S. should be less severe than initially forecast for the rest of 2016.

"I don't know if I can call the top or the bottom, but we are encouraged to see that it appears to be less negative," Mr. Falk said in an interview, noting that Russia and Brazil in particular have been improving.

Shares of the company fell 1.8% in morning trading to $132.26.

Kimberly-Clark, like other consumer product rivals, had targeted emerging markets, such as Brazil and Russia, to help it counter sluggish growth in developed markets. But higher inflation and political turmoil has hurt demand. About half of Kimberly-Clark's sales are outside the U.S.

The Dallas personal-care company now expects full-year organic sales growth at the low end of its previously released range of 3% to 5% because of lower-than-expected benefits from price increases.

The company now says fallout from currency fluctuations will have a 4%-to-5% negative effect on sales and operating product, instead of the previously forecast 5% to 6%.

The company swung to a profit of $566 million from a loss of $305 million in the same quarter a year ago. Profit was helped by organic sales growth, lower expenses and a lower effective tax rate. In addition, the prior-year quarter included pension-settlement charges.

The company cut marketing, research and general expenses by 2.5%.

In its personal-care unit, the company's largest, sales fell 1.2% to $2.28 billion as changes in currency rates cut sales by 6%. Volumes increased 6%. In consumer tissue, sales were down just 0.3% to $1.49 billion on currency rates and unfavorable product mix changes. Volumes increased 3%.

Write to Sharon Terlep at [e-mail] and Austen Hufford at [e-mail]

(END) Dow Jones Newswires

July 25, 2016 11:58 ET (15:58 GMT)

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