Healthcare products maker Kimberly-Clark Corp. (KMB) on Friday reported a 14 percent increase in profit for the first quarter on higher sales as well as cost savings. Both revenue and adjusted earnings per share beat analysts' estimates. Looking ahead, the company raised its earnings outlook for fiscal 2013.
Thomas Falk, chairman and CEO of Kimberly-Clark said, "We improved adjusted gross margin by 140 basis points and adjusted operating profit margin by 200 basis points. We delivered all-time record adjusted earnings per share, reflecting continued momentum in K-C International, $85 million of cost savings from our ongoing FORCE program and above-plan volume growth in North American consumer tissue."
The Dallas, Texas-based company, whose products include Kleenex tissues and Huggies diapers, said its first-quarter net income was $531 million or $1.36 per share, up from $468 million or $1.18 per share in the year-ago period.
Adjusted earnings for the quarter were $578 million or $1.48 per share, compared to $492 million or $1.24 per share in the prior-year period. On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $1.34 per share for the quarter. Analysts' estimates typically exclude one-time items.
Adjusted earnings results reflect organic sales growth, cost savings and higher other income. These were partly offset by input cost inflation, increased marketing, research and general spending, and a higher effective tax rate.
Net sales for the quarter grew 2 percent to $5.32 billion from $5.24 billion in the year-ago period and beat analysts' consensus estimate of $5.28 billion.
Organic sales rose 3 percent, driven by 2 percent increase in sales volumes and 1 percent increase in selling prices. Organic sales growth include increases of 6 percent in North American consumer tissue and 5 percent in K-C International.
Organic sales exclude the impact of changes in foreign currency rates and lost sales as a result of European strategic changes as well as pulp and tissue restructuring actions.
Personal care segment sales for the quarter grew 1 percent from last year, while sales at consumer tissue segment grew 4 percent. K-C Professional segment sales declined 1 percent, while sales at health care segment decreased 2 percent from a year ago.
For fiscal 2013, Kimberly-Clark forecasts adjusted earnings of $5.60 to $5.75 per share, up from the prior range of $5.50 to $5.65 per share. This compares to adjusted earnings per share of $5.25 in 2012. Analysts expect the company to earn $5.59 per share.
Kimberly-Clark said it is streamlining its European manufacturing footprint and administrative organization in order to align its cost structure with its strategic decisions. The company now expects restructuring costs for these actions will be incurred through 2014.
The company now projects restructuring costs of $300 million to $350 million after tax, up from the prior estimate of $250 million to $350 million after tax.
KMB closed Thursday's trading at $101.36. In Friday's pre-market, the stock is adding $3.24 or 3.20 percent to $104.60.
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