Despite higher sales and tighter expenses, Kimberly-Clark (KMB) reported on Monday an 8% drop in third-quarter profit that just matched Wall Street’s expectations, as U.S. demand for diapers remained slow.
Reflecting the bleak performance, the maker of personal-care products narrowed its fiscal earnings outlook to a range of $4.80 to $4.90 a share from its earlier view between $4.80 and $5.05 a share, and said it expects volumes to be lower than anticipated.
Analysts polled by Thomson Reuters are currently expecting a 2011 profit of $4.85 a share.
The Dallas-based manufacturer of brands such as Kotex, Pull-Ups, Kleenex and Cottonelle posted net income of $342 million, or $1.09 a share, compared with $469 million, or $1.14 a share, in the same quarter last year.
Excluding one-time items, the company would have earned $1.26 a share, which matches the Street’s view. Kimberly-Clark attributed the stronger adjusted earnings to cost cutting initiatives and sales growth, however partially offsetting those gains was cost inflation, a strengthening dollar and lower income from equity companies.
The company also saw weaker demand in the U.S. for diapers amid a lower birthrate and increased competition from rival Procter & Gamble (PG).
Revenue for the three-month period soared to an all-time high of $5.4 billion, up 8% from $4.9 billion a year ago, trumping the Street’s view of $5.31 billion. Demand was softer-than-expected in parts of North America and Europe, Kimberly-Clark said.
“Our marketing positions remain solid overall and our innovation and marketing programs are on track,” the company’s chief executive Thomas Falk said in a statement.
He noted that the company is not on track with all of its goals this year but still remains focused on its growth and cost reduction initiatives, particularly in its international businesses.