Kimberly-Clark net sales go up in Q3
Kimberly-Clark Corporation reported that net sales in the third quarter of 2008 advanced 8.2 percent to $5.0 billion. Sales were higher in all four of the company's business segments, highlighted by continued strong performance in Personal Care and K-C Professional & Other and double-digit sales growth in developing and emerging markets. Organic sales growth totaled almost 6 percent, driven by improvements in net selling prices and product mix of about 4 percent and 2 percent, respectively, while sales volumes declined less than 1 percent. Changes in currency exchange rates benefited sales by less than 3 percent.
Diluted net income per share in the third quarter of 2008 was $0.99 compared with $1.04 in the prior year. Adjusted earnings for the quarter were $1.02 per share versus $1.07 per share in 2007 and in line with the company's previous guidance range of $.98 to $1.03 per share. The top-line growth, along with cost savings, higher net income from equity affiliates and a lower share count, contributed positively to the current quarter's results; however, earnings were negatively impacted by inflation in commodity costs totaling approximately $250 million. Meanwhile, the company continued to step up its investment in strategic marketing, increasing spending by $25 million compared with the third quarter of last year.
Adjusted earnings exclude charges for strategic cost reductions to streamline the company's operations in both years, and certain incremental implementation costs related to the strategic cost reduction plan and the gain on a litigation settlement in 2007. Further information about these adjustments, along with the company's rationale for reporting adjusted earnings and other non-GAAP financial measures is provided later in this news release.
Chairman and Chief Executive Officer Thomas J. Falk said, "Our third quarter results show that our focus on improving revenue realization is beginning to pay off, with higher prices and better product mix. While this strategy has dampened volume growth more than we anticipated in the near-term, I am confident we are doing the right things to strengthen our competitive position and improve our profitability over the long haul. I am also proud of the accomplishments of K-C teams around the world who are striving to overcome the most challenging cost hurdle the company has ever faced. Finally, I am pleased by the continued strength of our cash flow and our balance sheet, particularly in light of recent developments impacting global financial markets."
Sales volumes for Huggies diapers were up slightly, while volumes for the company's child care, feminine care and incontinence care brands were down low single-digits. Meanwhile, sales volumes rose at a double-digit rate for Huggies baby wipes.
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