Kimberly-Clark Revenue Falls -- Update

By Austen Hufford and Paul Ziobro 

Kimberly-Clark Corp. said resilience among U.S. shoppers helped offset weakness in its businesses in Brazil, China and Russia that dragged on quarterly sales.

The maker of Huggies diapers and Kleenex tissue said shoppers in the U.S. are willing to spend more on new products, such as improved diapers, feeling the benefits of a falling unemployment rate and lower gas prices. In addition, store brands have stopped gaining market share in most of the categories Kimberly-Clark sells in, Chief Executive Thomas Falk said.

"It's another signal that you're not seeing as much trade down at this level," Mr. Falk said in an interview on Monday. "The U.S. consumer is in a pretty good place."

Mr. Falk's comments come as Kimberly-Clark saw the stronger dollar wipe out much of the growth elsewhere in the world. The company's fourth-quarter sales fell 6% to $4.5 billion, though they would have been 5% higher without currency fluctuations. Kimberly-Clark reported gains in organic sales of its adult incontinence and baby diaper businesses.

Shares of the company fell 3% on Monday, but are up about 10% over the past 12 months.

Overall, Kimberly-Clark reported a profit of $333 million in the fourth quarter, up sharply from a loss of $83 million a year earlier when the company took a charge related to the revaluation of the Venezuelan currency.

Sales in emerging markets were up 9% on an organic basis, though that includes slowdowns in some important markets. Mr. Falk said Kimberly-Clark's business-to-business division experienced a slowdown in China. It is still opening factories and expanding to more cities to capitalize on the growing birthrate, which could get a boost this coming year. he said. Chinese families may have put off new babies last year, so they could be born during the coming, more auspicious Year of Monkey.

"Our team views it as a very good year," he said, adding that the number of births could rise as much as 7%.

Other emerging countries Kimberly-Clark has targeted, such as Brazil and Russia, are more problematic as higher inflation is hurting demand and slowing down economic growth.

Kimberly-Clark forecast per-share earnings would rise to between $5.95 and $6.15 a share this quarter, compared with the average analyst estimate of $6.14 a share. Sales are expected to either fall 3% or be flat, owing largely to the stronger dollar.

Write to Austen Hufford at [e-mail] and Paul Ziobro at [e-mail]

(END) Dow Jones Newswires

January 25, 2016 17:11 ET (22:11 GMT)

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