Earnings of consumer goods manufacturer Kimberly-Clark (KMB) rose in the first quarter on higher sales, in line with expectations. Meanwhile, unadjusted profit fell sharply owing to charges related to restructuring.
Kimberly’s shares, which lost nearly 17% so far this year, regained some of the lost momentum following the announcement.
Adjusted net income grew 9% year-on-year to $1.71 per share during the quarter, matching expectations. Earnings, including charges related to the company’s restructuring program, fell 83% to $0.26 per share. Restructuring costs of $577 million negatively impacted the bottom line.
Meanwhile, earnings benefitted from cost-saving initiatives, volume growth and lower spending on promotional activities.
The maker of Huggies diapers and Kleenex tissue reported a 5% growth in net sales to $4.7 billion even as organic sales gained 2% in North America. The top line also benefitted from favorable foreign currency rates.
Earnings benefitted from cost-saving initiatives, volume growth and lower spending on promotional activities
“While our margins were impacted by significant commodity inflation, we’re taking actions to increase net realized revenue and reduce costs in order to improve performance. We are broadly on track with our plan for the year and we remain optimistic about our opportunities to create long-term shareholder value through execution of our Global Business Plan strategies,” said Kimberly CEO Thomas Falk.
For fiscal 2018, the company expects earnings in the range of $3.67 per share to $4.27 per share, and adjusted earnings between $6.90 per share and $7.20 per share. It reaffirmed organic sales growth target at 1%.
Kimberly’s extensive global restructuring program is expected to result in total pre-tax costs of $1.7-$1.9 billion by 2020-end. It is anticipated that the program will generate annual pre-tax cost savings of $500-$550 million by 2021. Among competitors, Proctor & Gamble (PG) posted better than expected earnings and revenues for the first quarter.
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