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Kimberly-Clark net sales down in Q4 2008
Jan '09
Kimberly-Clark Corporation reported that net sales in the fourth quarter of 2008 decreased 3.4 percent to $4.6 billion, as the effect of weaker foreign currency exchange rates more than offset organic sales growth of approximately 5 percent. The growth in organic sales was driven by higher net selling prices, favorable product mix and continued improvement in sales volumes across developing and emerging markets. Overall sales volumes, however, were below prior year levels due primarily to lower shipments of Huggies diapers and Pull-Ups in North America, as well as the company's consumer tissue and K-C Professional products in North America and Europe. Sales volumes for the quarter also trailed planned levels as customer and consumer demand was impacted by deteriorating economic conditions in these geographies.

Diluted net income per share for the quarter was $1.01 compared with $1.07 in the prior year. Adjusted earnings were $1.01 per share versus $1.11 per share in the fourth quarter of 2007 and below the company's previous guidance range of $1.02 to $1.07 per share. During the quarter, the company made further progress in improving revenue realization, which contributed to an increase in operating profit margin from recent lows. Nonetheless, operating profit and margin were down compared with the prior year, mainly as a result of higher manufacturing costs, including inflation of about $135 million, and unfavorable currency effects, along with the decline in sales volumes and higher expenses included in other (income) and expense, net. Meanwhile, the company continued to boost marketing investment, increasing spending by more than $25 million compared with the fourth quarter of 2007. Overall, currency effects reduced earnings in the fourth quarter of 2008 compared with the prior year by more than 20 cents per share, including approximately 8 cents per share as a result of significant currency losses incurred by the company's equity affiliate, Kimberly-Clark de Mexico.

Fourth quarter adjusted earnings per share excludes charges in 2007 for strategic cost reductions to streamline the company's operations and certain incremental implementation costs related to the strategic cost reduction plan. Additional detail on these items and further information about adjusted earnings per share and why the company uses this non-GAAP financial measure are provided later in this news release.

Chairman and Chief Executive Officer Thomas J. Falk said, "During the fourth quarter, economic weakness impacted our categories more than anticipated, particularly in North America and Europe. We believe some of the effects are temporary, reflecting customer warehouse and consumer pantry inventory reductions; however, consumer trade-down also affected our sales in several categories. We are fine tuning our pricing and promotional plans to ensure we remain competitive, particularly in diapers and training pants in North America.

"Reflecting on the year, we made solid progress on a number of fronts while managing through a challenging business environment. Kimberly-Clark teams have delivered solid organic sales growth, above the high end of our long range target, brought innovative new and improved products to market, enhanced the competitive position of our brands, deepened our relationships with key customers and maintained a strong financial position. I am also encouraged that our focus on revenue realization has contributed to positive operating profit margin momentum as we enter 2009."

For more detail click here.

Kimberly-Clark Corporation

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