Kimberly-Clark Corp. posted a smaller-than-expected rise in adjusted quarterly profit on Tuesday as cost cuts and a lower share count were not enough to overcome soft demand in businesses such as North American diapers and some higher costs.
Kimberly-Clark expects economic conditions to “remain difficult in the near term, particularly in developed markets,” Chairman and Chief Executive Thomas Falk said in a statement.
Also, while commodity cost pressures have eased a bit, volatile foreign currency exchange rates should be a headwind this year, he added.
The company, which makes Kleenex tissues, Huggies diapers and Cottonelle toilet paper, earned $401 million, or $1.01 per share, in the fourth quarter, down from $492 million, or $1.20 per share, a year earlier.
Adjusted earnings, which exclude costs for the company’s pulp and tissue restructuring, rose 7 percent to $1.28 per share. Net sales rose 2 percent to nearly $5.18 billion.
A year ago, Kimberly-Clark announced plans to exit its pulp manufacturing operations. On Tuesday, it said it would also take restructuring actions at another North American facility related to its consumer tissue business.
After-tax charges for all of the restructuring actions are now expected to be $385 million to $420 million, versus the company’s prior forecast of $280 million to $420 million.
In personal care, the company’s largest unit, fourth-quarter sales rose 2 percent to $2.2 billion, with the volume of goods sold up 2 percent and prices up 1 percent.
Operating profit in the unit declined, due in part to higher materials costs as well as stepped-up spending on marketing and research.
In North America, personal care sales fell about 5 percent.
Volume in the North American diapers and training pants business has now fallen for five consecutive quarters, hurt by a lower birth rate and competition from Procter & Gamble’s Pampers and store brands.
Kimberly-Clark forecast 2012 adjusted earnings of $5.00 to $5.15 per share and said it plans to spend at least $2 billion to pay dividends and repurchase shares. The company expects to raise its dividend at a mid-single digit rate as of April.
Kimberly-Clark’s results kicked off earnings season for U.S. household products makers. Colgate-Palmolive Co and P&G are set to issue their results later this week, followed by Clorox Co next week.