Kimberly-Clark Corp Raises Full-Year Outlook Despite Foreign-Exchange Headwinds

By Joe TenebrusoFool.com

Source: Kimberly-Clark.

Kimberly-Clarkreported third-quarter results on Wednesday. The maker of Huggies diapers and Kleenex tissues saw its sales and profits dented by negative foreign-exchange-rate fluctuations, but the consumer-goods giant was still able to muster solid organic growth and volume gains.

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Kimberly-Clark results: The raw numbers

Source: Kimberly-Clark Q3 2015 Earnings Press Release.

What happened with Kimberly-Clark this quarter?

  • Kimberly-Clark's 7% year-over-year decline in sales was largely due to the significant negative impact from foreign exchange fluctuations, which reduced sales 12%. Excluding the impact of changes in foreign currency rates, organic sales rose 5% -- including a 10% increase in developing markets -- as volumes increased approximately 5%, and product mix was slightly favorable.
  • Excluding pension settlement charges and restructuring costs, adjusted operating profit fell 6%, to $826 million, as cost savings related to Kimberly-Clark's FORCE (Focused On Reducing Costs Everywhere) program, and lower raw material costs, were offset by foreign-exchange effects and increased marketing expenses.
  • Cash provided by operations was$849 millionin the third quarter compared to $976million in Q3 2014, due to lower cash earnings and a smaller improvement in working capital than in the prior-year period.
  • Management continues to pass on that cash to shareholders, with 1.4 million shares repurchased in Q3 2015 at a cost of$150 million. The company expects full-year share repurchases to total$800 million, in line with the previous target of$700 million to$900 million.

What management had to say"Organic sales grew mid-single digits, with benefits from targeted growth initiatives, innovations and brand investments," said Chairman and CEOThomas Falk.

Looking forwardManagement now expects full-year 2015 organic sales growth to be in the range of 4% to 5%, compared to the company's prior expectation of 3% to 5%. Full-year 2015 adjusted earnings per share are anticipated to be$5.70to$5.80 versus the company's previous guidance of$5.65to$5.80.

Yet foreign exchange is likely to continue to take a toll on Kimberly-Clark's results, with currency translation now expected to reduce full-year 2015 sales by 10% to 11% versus a prior assumption of 10%, and operating profit by 11% to 12%, which was previously 11%.

The article Kimberly-Clark Corp Raises Full-Year Outlook Despite Foreign-Exchange Headwinds originally appeared on Fool.com.

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