DALLAS -- Tissue and diaper maker Kimberly-Clark Corp. posted higher first-quarter earnings as sales rose sharply, offsetting price declines due to promotions such as coupons.
Kimberly-Clark, which makes Kleenex tissues and Huggies diapers, said Thursday it earned $459.3 million, or 91 cents per share, in the January-March period, compared to $397.7 million, or 78 cents per share, a year earlier.
That matched forecasts from the company and from analysts surveyed by Thomson First Call.
Revenue rose 9 percent to $3.8 billion - better than analysts had expected - from $3.5 billion.
Kimberly-Clark said it sold 6 percent more products and also profited from the weak U.S. dollar, which boosted the value of sales overseas.
Those trends offset a 2 percent decline in the net selling price of Kimberly-Clark products, which reflected price-cutting and other promotional moves such as shopper coupons to boost sales.
Analysts were surprised by the degree and timing of price cutting - coming just as Kimberly-Clark is negotiating with retailers to raise prices on tissues, toilet paper and paper towels by an average 6 percent this summer.
Chairman and chief executive Thomas J. Falk predicted that the price increase will stick. The company blamed the increase on rising prices for fiber - paper pulp has risen 20 percent in about 18 months - and energy. Rivals Procter & Gamble Co. and Georgia Pacific Corp. plan similar price increases this summer.
Linda Bolton Weiser, an analyst with Oppenheimer & Co., said Kimberly-Clark's confidence suggested big retailers such as Wal-Mart Stores Inc. may already have signaled they will go along with the price changes.
"If they don't get those price increases, it's going to be hard to make their earnings in the second half of the year, but they're not expressing any uncertainty at all," she said of Kimberly-Clark executives.
Asked by analysts about the decline in selling prices during the January-March period, Falk acknowledged the company is in a pitched battle for market share. He said the company had to spend more than usual on promotions in the quarter, some of it to push new products such as Huggies Supreme and fancier lines of training pants for toddlers.
"The market is not getting any easier out there," he said. "All of our competitors in all of our categories are still spending more aggressively."
The Irving-based company said it posted record North American shipments of its Pull-Ups training pants - another category where it competes with P&G - and mid single-digit growth for Huggies. Sales of tissues rose about 10 percent, helped by foreign sales and the weak dollar.
Falk said second-quarter earnings would be 87 cents to 89 cents per share despite higher costs for raw materials, and profit for all 2004 would be "toward the high end" of its previously predicted $3.55 to $3.65 per share. Both figures are in line with analysts' expectations.
Kimberly-Clark shares gained 54 cents to $65.30 in afternoon trading on the New York Stock Exchange.
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Company site: www.kimberly-clark.com
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