K-C gaining market share in several businesses

25 Apr '11

3 min read

Kimberly-Clark Corporation reported first quarter 2011 results and updated its expectations for full-year 2011 adjusted earnings per share and related key planning assumptions.

Executive Summary

• First quarter 2011 net sales of $5.0 billion increased 4 percent. Organic sales, which exclude the impact of changes in foreign currency rates, rose more than 2 percent, driven by higher sales volumes.
• Diluted net income per share for the quarter was $0.86 compared with $0.92 in the year-ago period.
• First quarter adjusted earnings per share were $1.09 in 2011 and $1.14 in 2010. In 2011, adjusted earnings exclude costs for the company's previously announced pulp and tissue restructuring and a non-deductible business tax charge related to a law change in Colombia. Adjusted earnings per share in 2010 exclude a loss for the remeasurement of the local currency balance sheet in Venezuela as a result of the adoption of highly inflationary accounting. These items are described later in this news release.
• Adjusted earnings comparisons benefited from sales growth, cost savings, a decline in the effective tax rate and a lower share count, but those factors were more than offset by input cost inflation.
• Adjusted earnings per share in 2011 are now expected to be $4.80 to $5.05 compared to the company's previous guidance of $4.90 to $5.05. The wider outlook includes expectations for significantly higher input cost inflation, along with incremental company plans to improve revenue realization and reduce costs compared to previous assumptions.

Chairman and Chief Executive Officer Thomas J. Falk said, "We continue to execute our Global Business Plan strategies in a difficult environment. We grew organic sales in the first quarter in line with our full-year plan, as we continue to benefit from innovation and targeted growth initiatives. We are gaining market share in several businesses, and we are launching a number of product innovations to further improve our brands. We also continue to deliver significant ongoing cost savings and allocate capital in shareholder friendly ways, with first quarter share repurchases and dividend payments totaling more than $1.1 billion."

Falk added, "Still, the rapid run-up in commodity costs has influenced our near-term profitability, so we are taking aggressive actions in response to the cost environment. A number of our businesses will be raising selling prices, including most of our North American consumer products businesses. We are also implementing incremental FORCE cost savings programs as we further leverage our global procurement organization and our continuous improvement capabilities. Finally, we will be reducing overhead spending compared to our previous plans.

“The benefits from these actions will be more visible in our results in the second half of the year, and all told, we expect to offset most, if not all, of the incremental inflationary headwinds we are now anticipating compared to our prior assumptions. Nonetheless, to take into account the rapid increase in cost inflation and the volatility in the cost environment, we have widened our guidance range for adjusted earnings per share in 2011. We are firmly convinced that successful execution of our Global Business Plan will improve shareholder value over time."

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Kimberly-Clark Corporation

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