Consumer goods manufacturer Kimberly-Clark (KMB) reported a 20% dip in earnings for the third quarter due to significant commodity and currency headwinds. However, the results exceeded analysts’ expectations. The company also confirmed its previous guidance for the full year 2018. Following this, the stock inched up over 2% in the premarket session.
Net income for the quarter fell 20% to $462 million and earnings dropped 19% to $1.29 per share. However, adjusted earnings increased 7% to $1.71 per share.
Changes in foreign currency exchange rates reduced sales by 3% while organic sales increased 1%. Net sales declined 2% to $4.6 billion. Net selling prices and product mix each improved 1%, while volumes slid 1%.
In North America, organic sales declined 1% in consumer products and increased slightly in K-C Professional. Outside North America, organic sales rose 3% in developing and emerging markets and 1% in developed markets.
Sales from Personal Care Segment declined 1% and that from Consumer Tissue Segment decreased 3%. The segments were hurt by changes in currency rates.
In January 2018, Kimberly-Clark initiated the 2018 Global Restructuring Program. The company expects the program will generate annual pre-tax cost savings of $500 million to $550 million by the end of 2021, driven by workforce reductions along with manufacturing supply chain efficiencies.
As part of the program, Kimberly-Clark expects to exit or divest some low-margin businesses that generate about 1% of company net sales. To implement the program, the company expects to incur restructuring charges of $1.35 billion to $1.5 billion by the end of 2020. The restructuring charges for the third quarter of 2018 were $119 million, bringing cumulative charges to $649 million after tax.
Looking ahead into the full year 2018, the company continues to expect organic sales growth of about 1% and adjusted EPS of $6.60 to $6.80, a year-on-year increase of 6% to 9%. Adjusted effective tax rate outlook was lowered to the range of 21% to 22% from the prior forecast at the low end of 23% to 26% range.
Shares of Kimberly-Clark ended Friday’s regular session up 0.69% at $110.23 on the NYSE. The stock has fallen over 8% in the year so far and over 2% in the past year.
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