Kimberly-Clark Records Small Sales Gain Amid More Competition
January 24 2017 - 12:35PM
Dow Jones News
By Sharon Terlep and Joshua Jamerson
Kimberly-Clark Corp. will step up spending on new products and
plants around the world to combat sluggish demand for household
staples from diapers to toilet paper.
The maker of Kleenex tissues and Huggies diapers on Tuesday
forecast tepid sales growth for 2017 as consumers remain reticent
to spend and competition mounts from global and local rivals.
"This is an environment where growth is hard to come by,"
Kimberly-Clark Chief Executive Thomas Falk said in an
interview.
The company entered 2016 predicting 3%-5% organic sales growth
but ended the year with just a 2% increase and said it expects the
same for 2017.
Meanwhile, Procter & Gamble Co., the world's largest
consumer-products company, has picked up steam in the last six
months after years of stagnating growth. It nudged its organic
sales forecast to 2%-3% for the fiscal year, up from 2%, when it
reported earnings last week.
Mr. Falk said he is planning for around $900 million in capital
spending this year, about 10% higher than in 2016, on projects that
will include new product development, upgraded factory lines and
additional capacity where it is needed.
Kimberly-Clark has offset slower sales with a cost-cutting plan,
completed last year, that is expected to save $140 million
annually. Investment is needed as well, Mr. Falk said, to address
changing consumer tastes and to capitalize on areas of growth, such
as in China.
"We have the same players chasing a smaller pie, and more
competitors moving into more markets," he said in a call with
analysts. "It used to be us and our primary global competitors, and
now we have one or two more global players."
The Dallas company reported organic sales growth of 1% for the
quarter ended Dec. 31 and eked out a small gain in net sales. Its
profit rose to $505 million, or $1.40 a share, up 50% from $333
million, or 91 cents a share, a year earlier.
Revenue edged up 0.1% to $4.54 billion. For 2017, Kimberly-Clark
projects earnings in a range of $6.20 to $6.35 a share and net
sales similar to the $18.2 billion reported for 2016.
The company also said Tuesday that it plans to raise its
quarterly dividend to 97 cents a share from 92 cents. The dividend
will be payable April 4 to shareholders of record March 10.
Kimberly-Clark shares, which have risen recently but are still
3% lower than a year ago, climbed nearly 4% to $121.36 in recent
trading Tuesday.
Write to Sharon Terlep at sharon.terlep@wsj.com and Joshua
Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
January 24, 2017 13:20 ET (18:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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