Kimberly-Clark Corp Confirms 2017 Profit Forecast

By Joe Tenebruso Markets Fool.com

Kimberly-Clark(NYSE: KMB)reported first-quarter results on April 24. The maker of items including Huggies diapers and Kleenex tissues saw its earnings inch up even as sales growth remained sluggish.

Continue Reading Below

Kimberly-Clark results: The raw numbers

Metric

Q1 2017

Q1 2016

Year-Over-Year Change

Net sales

$4.483 billion

$4.476 billion

0%

Net income

$563 million

$545 million

3%

Earnings per share

$1.57

$1.50

5%

Data source: Kimberly-Clark Q1 2017 earnings release.

What happened with Kimberly-Clark this quarter?

Net sales were flat year over year at roughly $4.5 billion, as a 1% decrease in organic sales was offset by a 1% positive impact from foreign exchange rate fluctuations.

Continue Reading Below

Organic sales rose 4% in developing markets, but within its North American consumer products segment, organic sales were down 3% as Kimberly-Clark curtailed promotional activity and heightened competition dented results.

Image source: Getty Images.

Still, operating profit increased 2% to $834 million -- versus adjusted operating profit of $818 million in the prior-year quarter -- as $110 million in cost savings related to Kimberly-Clark's FORCE (Focused On Reducing Costs Everywhere) program helped lift operating margin 30 basis points to 18.6%.

In turn, net income rose 1% to $563 million. And earnings per share, aided by share buybacks, increased 3%, to $1.57, up from $1.53 in the year-ago period.

"We delivered earnings growth in the first quarter despite a challenging environment, particularly inNorth America," said Chairman and CEOThomas Falk in a press release. "In addition, we returned more than$600 millionto shareholders through dividends and share repurchases."

Looking forward

Kimberly-Clark updated its sales outlook for 2017. Management now expects full-year net sales to increase 1% to 2% -- compared to its prior forecast of 2017 sales similar to 2016 -- as foreign exchange is expected to be neutral versus previous estimates for a negative 2% impact. The company did, however, lower its organic sales growth guidance slightly to 1% to 2%, compared to previous expectations of approximately 2%.

Additionally, Kimberly-Clark reiterated that it continues to target earnings per share of $6.20 to $6.35 in 2017.

"The outlook for currencies has improved, while commodity inflation has picked up somewhat and category growth continues to be relatively modest," said Falk. "We remain optimistic about our opportunities to create long-term shareholder value through execution of our global business plan."

10 stocks we like better than Kimberly-Clark
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Kimberly-Clark wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 3, 2017

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends Kimberly-Clark. The Motley Fool has a disclosure policy.