The consumer goods giant has posted stagnant sales for its second quarter, but the company’s personal care division shows a big drop in sales as realignment and a poor economy hit the European business.
Group sales were level with the same period last year, at $5.3bn, which represented a 3 percent increase in organic sales and a 9 percent increase in K-C International sales, which represents the company’s presence in emerging markets.
The group’s net income for the quarter rose by 5.6 percent to $526m, compared to $498m in the corresponding period last year, though this figure did exclude restructuring costs for the European business.
Although chairman and CEO Thomas Falk re-affirmed full-year organic sales targets of 3 to 5 percent, he did state that certain economic challenges indicate that the company is not likely to out perform.
Full year sales likely to hit lower end of expectations
“If recent spot currency rates generally hold going forward, it is less likely that adjusted earnings per share will be in the upper half of our guidance range,” said Falk.
“Although the macro environment has become more volatile recently, we continue to be optimistic about our prospects to drive profitable growth and to generate attractive returns to shareholders."
In the company’s mainstay personal care division, sales were down by 1 percent to $2.4bn for the quarter, which the company stated was mainly due to a 1 per unfavorable currency translation and a 3 percent drop in sales volumes in Europe.
However, on the plus side, the company said that it European restructuring had helped to boost efficiencies for the business, with second quarter operating profit rising 6 percent to $432m.
Sales in Europe slide 29 percent
Sales in Europe dropped by 29 percent, which included a 36 point negative impact from lost sales in conjunction with European strategic changes, though organic sales volumes rose by 8 percent.
In North America, sales were down 3 percent, mainly impacted by feminine care volumes that fell in the upper single digits.
However, the results were buoyed by a 5 percent increase in K-C International where sales increased by 5 percent, despite a 3 percent negative impact from currency translations.