Kimberley Clark Q1 net income knocked down 35.71%

24 Apr '15

3 min read

Driven by redemption of $0.5 billion of preferred securities in December 2014, net income at NYSE listed Kimberly-Clark (K-C) was knocked down by 35.71 per cent year on year in the first quarter ended March 31, 2015.

According to a K-C press release, its net income for the first quarter of 2015 nosedived 35.71 per cent to $18 million from $28 million in the first quarter of 2014.

In the reporting quarter, K-C posted sales of $4.7 billion, down 4 per cent compared to the year-ago period.

“Changes in foreign currency exchange rates reduced sales 9 per cent as a result of the weakening of most currencies relative to the US dollar,” it said.

Organic sales rose 5 per cent, as volumes increased 3 per cent and both, net selling prices and product mix, rose by 1 per cent each.

First quarter of 2015 operating profit amounted to $748 million as against $711 million in the prior year quarter.

However, adjusted operating profit stood higher at $815 million in the first quarter of 2015 compared to $760 million in the comparable quarter of 2014.

“Adjusted results in 2015 exclude a $45 million charge for a balance sheet re-measurement in Venezuela, $13 million of 2014 organisation restructuring costs and $9 million of charges for pension settlements,” it explained.

While, adjusted results in 2014 exclude a $39 million charge related to a regulatory dispute in the Middle East and $10 million of restructuring costs for European strategic changes.

The year-over-year adjusted operating profit comparison benefited from organic sales growth, $90 million in cost savings from the company's FORCE program and $10 million of savings from organisation restructuring.

For the quarter under review, input costs declined $10 million, as slightly lower costs for energy and raw materials other than fibre were mostly offset by slightly higher fibre costs.

Translation effects due to changes in foreign currency exchange rates lowered operating profit by $75 million and transaction effects also negatively impacted comparisons.

The first quarter effective tax rate stood at 33.8 per cent in 2015 as against 30.5 per cent in 2014, while first quarter of 2015 adjusted effective tax rate was 32.3 per cent, up from 29.0 per cent in same quarter of 2014.

K-C further added that results at Kimberly-Clark de Mexico, S.A.B., were negatively impacted by a weaker Mexican peso and input cost increases, partially offset by organic sales growth and cost savings.

Cash provided by operations in the first quarter of 2015 was massively down to $20 million from $437 million in 2014 mainly from higher pension contributions and increased operating working capital.

In the first quarter 2015, share repurchases totaled to 1.8 million shares at a cost of $200 million and during the quarter of 2015, it acquired 49.9 per cent interest in its subsidiary in Israel for $150 million.

As a result, the company is now targeting full-year 2015 share repurchases of $0.7 to $0.9 billion compared to the previous target of $0.8 to $1.0 billion. (AR)

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