Kimberly-Clark has announced strong organic sales growth on the back of developing markets, but the bottom line is impacted significantly by currency translations and a poor performance in Europe.
Sales for all business units, which includes health care, tissues and personal care, fell by 1% to $5.3bn, but increased by 4% on an organic basis, which does not take into consideration the 3% impact from foreign currency translations.
This figure also included a 12% increase in revenues from the company’s international business division, a figure that was counterbalanced by a much weaker performance in Europe, together with losses incurred in the Venezuela market, following the country’s currency devaluation.
Cost savings and sales growth pay dividends
"We delivered a solid first quarter with good organic sales growth and cost savings. We also launched a number of product innovations and made further progress with targeted growth initiatives,” said chairman and chief executive officer Thomas J. Falk.
“And although we face continued headwinds from currency exchange rates and cost inflation, we're maintaining our full-year guidance for adjusted earnings per share.”
First quarter sales for the personal care business fell by 1% to $2.4bn, a figure that was largely impacted by a 5% negative currency translation, as well as a poor result from the company’s operations in Europe, where sales fell by 36%.
Europe hit by poor sales and restructuring
The poor results in the European market were down to a 39 point decrease in personal care sales in the region, combined with the continued implementation of its European restructuring program.
Group sales were even in the US, but in the international division, which includes China, Russia and the Latin American markets, sales increased by 3%, despite a 9% negative impact from currency translations.
Sales in the US were fuelled by growth in baby wipes, while in K-C International, the company said it saw significant personal care sales volume increases in China, Russia, Vietnam and throughout most of Latin America.