Kimberly-Clark results buoyed by emerging markets, but currency translations hit hard

By Simon Pitman

- Last updated on GMT

Kimberly-Clark results buoyed by emerging markets, but currency translations hit hard

Related tags Currency translations Foreign currency translations Revenue North america China

Kimberly-Clark had a challenging first quarter, hit by currency headwinds that led to declines in all divisions, including personal care, but emerging markets are still growing.

First quarter sales decreased by 5% to $4.5 billion, mainly impacted by foreign currency translations that impacted the sales by 7%.

Local currency results were driven by a 5% increase in sales from emerging markets, which was the main driving force behind a 2% increase in organic sales.

Emerging markets boost organic sales

The company said that the overall performance benefited from the organic sales growth, together with cost savings, input cost deflation and a lower adjusted tax rate.

The underlying improvements meant that net income increased by 16.7% to reach $525m, compared to a figure of $450m in the corresponding period last year.

Personal care sales represent almost 50% of the company’s annual revenues, and during the quarter revenues for the division were $2.2bn, a decrease of 4.4% compared to the corresponding period last year.

Currency translations remain a big challenge

Sales for the division were particularly hard hit by currency translations, which impacted the figure by 9%, while volumes increased by 3% and the product mix was favorable by 1%.

The results were underscored by unfavorable currency effects and increased marketing, research and general spending which the company said was effectively counterbalanced by increases in organic sales, cost savings and lower input costs.

On a regional basis, North America sales increased by 3%, mainly driven by increases in volumes from higher sales in both baby wipes and child care.

In the emerging markets revenues decreased by 11%, which were impacted by an 18% drag from unfavourable currency rates. Gains were most significant in China and certain markets in the Latin American region.

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