Kimberly-Clark said higher costs for materials like wood pulp led to an 8.9% decline in quarterly earnings, and the maker of Huggies diapers and Kleenex tissues will once again look to pass on those higher costs to consumers.
Disappointed investors bid Kimberly-Clark shares 3% lower to $64.04 at midday Monday amid heavier-than-normal volume. Around 4.2 million shares changed hands less than halfway through the day's session, compared with their average daily volume of just 2.6 million.
Kimberly-Clark now expects costs this year to be nearly double its previous expectations, and it cut its 2011 profit outlook by 10 cents per share to a range of $4.80 to $5.05. Costs are expected to increase between $450 million to $550 million in 2011, compared with its prior estimate for cost increase assumptions between $200 and $250 million. Price increases on most of Kimberly-Clark's products -- and a weaker dollar -- should help pad the company's top-line however, and the company raised its sales growth forecast to a range of 4% to 6%, up from 3% to 4%.