Kimberly-Clark posts higher 3Q sales but lower profits

By Simon Pitman

- Last updated on GMT

Related tags Personal care division United states dollar Currency

Kimberly-Clark posted record sales income for the third quarter, boosted by a combination of a weak US dollar, higher sales volumes and higher prices for certain products, but net income takes a tumble, as does the outlook.

Sales were up 8 percent to $5.38bn, while organic sales, which excludes the positive effect of currency translations on account of the weak dollar, were up by 4 percent.

However, net profit took a tumble during the quarter, falling 7.9 percent to $432m, compared to $469m a year earlier. The figure was hit by a reduced operating profit and higher commodity prices, which particularly effected its developed domestic US and western European markets.

Volume estimates and currency translations lower expectations

“Based on the third quarter results and current market conditions, we have reduced our full-year volume estimates somewhat for portions of the developed markets,”​ said CEO Thomas Falk.

“In addition, as a result of the recent strengthening of the US dollar, we are now assuming less benefit this years from foreign currency exchange,”​ he added.

The company’s positive sales performance was particularly driven by its mainstay personal care division, which consists of wipes and a variety of other personal care products, including skin care.

The personal care division registered a 9.5 percent increase in revenues to $2.39bn, while sales for the second biggest division, consumer tissue, rose by 4.1 percent to $1.7bn.

Personal care: profits fall while sales rocket in emerging markets

However, despite the sales gains in the personal care division, third quarter operating profits declined 7 percent to $396m on account of input cost inflation, production curtailment and increased marketing, research and general expense.

However, breaking the figures down on a geographical basis, the company said that the results underlined a slowdown in the developed markets, particularly in the all-important domestic market, where sales grew just 1 percent during the period.

In contrast to this, the emerging markets are an increasingly important factor for the personal care business, underlined by its Latin America, Middle East and Eastern Europe market performance, which registered organic growth of 11 percent.

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