While its organic sales rose, Kimberly-Clark Corporation (KCP) has been hit negatively by currency exchange rates, driving down first quarter 2016 earnings. But in an optimistic assessment of its financial position, the company expects organic sales to grow between 3 and 5 per cent of the full year.
In a statement released 22 April 2016, KCP reported US $4.5 billion (AU $5.92 billion) net sales in the first quarter of 2016 decreased by 5 per cent when compared to the same period a year ago, due to changes in the foreign currency exchange rate which reduced sales by 7 per cent.
‘Organic sales rose 2 per cent, including a 5 per cent increase in developing and emerging markets. Diluted net income per share for the first quarter was US $1.50 (AU $1.97) in 2016 and US $1.27 (AU $1.67) in 2015’.
“We continue to execute our global business plan strategies for long-term success and we are confirming our previous top- and bottom-line outlook for 2016,” said Kimberly-Clark chairman and chief executive officer Thomas J. Falk.
“In the first quarter, organic sales grew more than 2 per cent and our adjusted operating profit margin improved by 90 basis points. We achieved US $110 million (AU $145 million ) of total cost savings from our FORCE program and 2014 organisation restructuring and continued to allocate capital in shareholder-friendly ways.”
‘First quarter adjusted earnings per share were US $1.53 (AU $2.01 ) in 2016 and US $1.42 (AU $1.87 ) in 2015’. Share performance was found to have benefited from aspects such as cost savings, input cost deflation, organic sales growth and a lower adjusted effective tax rate.
‘However, comparisons were negatively impacted by unfavourable foreign currency exchange rate effects and increased marketing, research and general spending on a local currency basis’.
Mr Falk also added that the company expects its organic sales to grow between 3 to 5 per cent for the full year.
“Compared to the first quarter, we expect more benefits from targeted growth initiatives, product innovations and improved net realised revenue. We expect to deliver on our commitments again this year,” he summarised.