Kimberly-Clark Revenue Nothing To Sneeze At; It's Up 8%

by Nina Lentini, Apr 24, 2007, 5:00 AM

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Kimberly-Clark Corp., maker of Kleenex, Huggies and Kotex, reported first-quarter revenue rose 8%, to $4.39 billion, with profit up 64% on strong sales growth and cost-cutting.

Sales volume grew, the company said in its first-quarter report yesterday, and Kimberly-Clark also benefited from currency exchanges - the cheaper dollar makes its products less expensive overseas - and more sales of higher-priced items.

Huggies and baby wipes both recorded double-digit increases in sales. But sales volumes for tissues fell in North America and Europe, and sales of health-care items were virtually flat.

Highlights included a 10th consecutive quarter of double-digit gains in developing and emerging markets, strong innovation-driven volume growth for the company's personal care business in North America and higher net selling prices overall.

Kimberly-Clark had expected cost inflation of $150 million for the year, but it was more than half that in the quarter alone. Three fourths of it is from pulp prices. Still, the company believes it can offset that with strong sales.

Positive customer and consumer response to new Huggies Newborn and Natural Fit diapers and Huggies Little Walkers diaper pants, launched in the second half of 2006, resulted in 9% volume growth for Huggies diapers in core European markets -- the U.K., France, Italy and Spain. In developing and emerging markets, personal care sales climbed about 16%, driven by a 12% increase in sales volumes and currency benefits of 3%. Sales growth was particularly strong throughout Latin America, as well as in China and Russia.

Sales of consumer tissue products rose 6.4% versus the first quarter of 2006, as net selling prices improved 3% and changes in currency exchange rates also benefited sales by 3%. Favorable product mix added about 2% to sales; however, sales volumes were lower by 2%.< P> In North America, first quarter sales of consumer tissue products rose approximately 4%, driven primarily by higher net selling prices, up 4%, and improved product mix of 1%, partially offset by a 1% decrease in sales volumes compared with the prior year. The rise in net selling prices was mainly attributable to list price increases implemented during the first half of 2006. Meanwhile, growth in higher-margin facial tissue and bathroom tissue product offerings enhanced product mix.

Earlier this month, the company brought on three new global marketing executives to better compete against the likes of Procter & Gamble. It is reportedly planning to boost its marketing spend $200 million by 2009.

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