Kimberly-Clark is Bracing for More Quarters of Sluggish Sales -- Update

By Sharon Terlep and Imani Moise 

Kimberly-Clark Corp. is bracing for more quarters of sluggish sales.

The maker of Kleenex tissues and Huggies diapers lowered its financial forecasts Monday, sending shares lower as third-quarter organic sales were flat and currency rates continued to erode profits.

Chief Executive Thomas Falk said a pickup in sales isn't imminent. "Every economic number seems to take the forecast down on GDP growth," Mr. Falk said. "I don't expect it's going to snap back right away."

Kimberly-Clark, like other consumer product rivals, had targeted emerging markets, such as Venezuela and Russia, to help counter sluggish growth in developed markets. But higher inflation and political turmoil have challenged operations, even causing some plants to halt production entirely.

Shares fell 3.1% to $115.80 in Monday trading. The stock has fallen 11% in the past three months through Friday's close.

Kimberly-Clark reported that organic sales increased 3% in developing and emerging markets but decreased in all other markets, making growth flat companywide for the quarter. Foreign currency rates reduced sales by more than 2% in the quarter.

Pricing fell in North America, in both personal care and consumer tissue, amid ramped up promotions across the industry.

The Irving, Texas-based company dropped its current-year forecast for organic sales growth, a metric that excludes the impact of foreign currency rates, to 2% compared with its previous expectation of growth between 3% and 5%. The company also narrowed its earnings guidance to $5.95 to $6.05 per share compared with the previous range of $5.95 to $6.15.

Overall for the quarter, Kimberly-Clark reported a 6.4% increase in profit to $550 million from a year ago. Revenue fell 2.6% to $4.59 billion, while gross margin rose to 36.4% from 35.7%

Write to Sharon Terlep at [e-mail]

(END) Dow Jones Newswires

October 24, 2016 11:33 ET (15:33 GMT)

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