Kimberly-Clark Misses on Costs, Raises Prices

DALLAS ( TheStreet) -- Kimberly-Clark ( KMB) cut its earnings forecast and said it will raise prices again this year as rising costs led it to miss quarterly profit expectations.

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.

In March Kimberly-Clark said inflationary pressure from higher raw materials and energy costs led it to raise consumer prices on its Cottonelle and Scott bathroom tissue products as well as baby and child care products under the Huggies, Pull-Ups and GoodNites brands .


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%.

In the recent quarter, Kimberly-Clark earned $350 million, or 86 cents per share, down 8.9% from $384 million, or 92 cents per share, earned in the year-earlier period.

Excluding one-time items, including restructuring expects, earnings declined to $1.09 per share, from $1.14 per share.

Results missed analysts' consensus call for earnings of $1.17 per share.

Revenue grew 4% to $5 billion, just ahead of expectations for sales of $4.98 billion.

A roster of companies from McDonald's ( MCD) and Hasbro ( HAS) to Hershey ( HSY), Kraft Foods ( KFT) and Starbucks ( SBUX) have reported in recent months that rising commodity costs are eating into their bottom lines.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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