cleaned up with record second-quarter sales of $4.5 billion and adjusted earnings of $1.04 a share.
The maker of such famous brands as Kleenex tissues and Huggies diapers beat analysts' expectations of $4.4 billion in sales and a profit of $1.03, according to Thomson Financial.
Including items, Kimberly-Clark earned $1 a share. A year ago, it had net income of 82 cents and revenue of just under $4.2 billion.
The company managed to offset higher costs with $76 million in internal cost savings. "Fiber prices are skyrocketing," said CEO Tom Falk. Not only has Kimberly-Clark raised prices, "it appears our competitors have as well," he added.
Falk went on to warn that it would be difficult to see gains in margins because of pulp prices in the current third quarter. Still, the Dallas-based company raised its earnings forecast for the year to a range of $4.20 to $4.25 a share from $4.10 to $4.20.
"Solid top-line growth is the reason behind our confidence in the numbers," said Falk.
Kimberly-Clark was upbeat when describing its cost-savings program, which was credited with helping to achieve an operating profit of $649 million. The company is on track to meet its target of $75 million to $100 million in savings for the full year.
Additionally, the company significantly increased its share repurchase program. The new 2007 target is $2.8 billion, up from the original plan of $600 million to $800 million.
For the quarter, sales were up in the personal care category, except for declines in the child care and feminine care lines. New child-care products are coming in the third quarter and are expected to lift sales for the business.
Consumer tissue also had positive sales across the board, but Kimberly-Clark's health unit experienced soft sales and a decline in volume because of the decision to exit the latex-glove business. The company also faced tough comparisons to last year, which benefited from face mask purchases by consumers concerned about the Asian flu.
The majority of analysts covering the stock have it rated a hold, according to Thomson Financial.
"We see little upside potential for the stock for the near term, while we see several potential challenges including higher costs, and continued weak results in Europe," wrote Erin Smith of Argus Research, in a research note.
At the same time, Loran Braverman of Standard & Poor's was a bit more optimistic.
"We expect the improvement to come from the benefits of a strategic cost-reduction program, begun in late 2005, a more moderate impact from non-pulp commodity costs, and price increases more than offsetting planned strategic investments in advertising and promotions," the analyst wrote in a research report.
Shares of Kimberly-Clark were up 1.9% Tuesday to $68.75.