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Tough Diaper Market Hurts Kimberly-Clark

Earnings fall, though it backs second-quarter and full-year estimates.


(KMB) - Get Report

first-quarter earnings were dampened by a competitive market for diapers.

The maker of Huggies and Pull-Ups posted a decrease in quarterly profit but backed its full-year 2003 and second-quarter earnings outlooks.

In the quarter ended March 31, Kimberly-Clark earned $397.7 million, or 78 cents a share, including various items, compared with $439.2 million, or 84 cents a share, in the prior-year quarter. Before certain items, Kimberly-Clark earned $408.8 million, or 80 cents a share, compared with $456.1 million, or 87 cents a share, last year. Analysts were expecting 77 cents a share.

Total sales were up about 4% to $3.5 billion. Sales benefited from a favorable exchange rate and 2% volume growth, the company said, and its consumer tissue, personal care and business-to-business units each posted higher sales. The company also said, however, that net selling prices were 1% lower, reflecting a continued competitive environment, particularly in its diaper and training pant categories in North America.

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"We made progress on our priorities for 2003 in the first quarter. Our businesses delivered volume growth despite intense competition and continued to aggressively drive plans for new and improved products," said Thomas J. Falk, chief executive of Dallas-based Kimberly-Clark. "In addition, with more than $40 million in cost reductions achieved in the quarter, we're on track to meet our $175 to $200 million target for the year."

Looking to 2003, Kimberly-Clark expects to earn at least $3.36 a share, before unusual items, while analysts expect $3.37 a share. The company earned $3.36 a share in 2002.

For the second quarter, the company expect earnings to be about the same as the first quarter's 80 cents a share, before items. Analysts predicted 84 cents a share. The company earned 86 cents a share in the second quarter of 2002.

Shares of the company closed at $47.25 on the

New York Stock Exchange