Kimberly-Clark results points to challenges in 2016

By Simon Pitman

- Last updated on GMT

Kimberly-Clark results points to challenges in 2016
Kimberly-Clark reports a rise in organic sales for its fourth quarter, but net results are hard hit by the strength of the dollar against foreign currency, a problem that is underlined in the company’s 2016 outlook.

Fourth quarter sales fell by 6% to $4.5bn, a figure that represented an increase of 5% in organic terms, when the 11% impact of foreign currency translations was not factored in.

The company’s net profit came in at $344m, which compared favorably to a loss of $63m in the corresponding period last year, but disappointed financial analysts’ expectations, causing shares to dip 4% in early trading.

Hard hit by Venezuela costs

The company was also hard hit by its operations in Venezuela, where continued economic difficulties caused it to incur a charge of $102m during the quarter related to deconsolidation.

The company’s personal care sales for the quarter outperformed the rest of the business, with sales down 4% to $2.2bn, which reflected a negative currency impact of 12% and sales volumes up 6%.

For the full year 2015, sales were down by 6% to $18.6bn, which represented an organic increase of 5% when discounted negative foreign currency translation amounting to 10%.

Net income for the year was $1.06bn, compared to $1.53bn in 2014.

The organic sales gains for 2015 were highlighted by a 10% increase in revenues for emerging and developing markets, and a 5% increase in volumes for the North American consumer products business.

2016 revenues will be hard hit by currency translations again

"We plan to achieve healthy organic sales growth and cost savings, improve cash flow and allocate capital in shareholder-friendly ways,"​ said CEO Thomas J. Falk, looking ahead to 2016.

"Despite another year of significantly unfavorable currencies, we also expect to further improve our margins and deliver 3 to 7 percent growth in adjusted earnings per share."

The company also said that revenues for 2016 are expected to be in the range of a decrease of 3% to level with those for 2015, while organic sales are expected to rise by 3 – 5%.

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