Kimberly-Clark Corp.’s second quarter financial results were hurt by currency fluctuations. The company posted lower sales across its segments. Overall sales fell 1.2 percent to $4.59 billion in the latest quarter versus previous year, whereas organic sales jumped 3 percent after factoring out currency impact.
The maker of Kleenex tissues and Huggies diapers reported that the negative effect of weak currencies in the markets outside the United States should be less severe as compared to the initial forecast for the remaining 2016.
The company’s Chief Executive Officer, Thomas Falk said Kimberly-Clark is cheered to see that it appears to be less negative. He added that the company is improving particularly in Russia and Brazil.
Like other consumer product competitors, Kimberly-Clark has targeted emerging markets, including Russia and Brazil, in order to offset slow growth in developed markets. However, political chaos and higher inflation has effected demand. The company makes roughly 50 percent of its revenue from markets outside the U.S.
Looking forward, Kimberly-Clark now anticipates organic sales growth at the low end of its earlier outlook of 3 percent to 5 percent for the full year, mainly due to lower-than-expected benefits from price hikes.
The Dallas personal-care company said that fallout from currency variations will have a negative impact of 4-5 percent on revenue and operating product, as compared to its earlier outlook in the range of 5-6 percent.
Kimberly-Clark posted a profit of $566 million in the latest quarter, as compared to a loss of $305 million in the same period last year. Profit was mainly driven by organic sales growth, lower effective tax rate and comparatively lower costs. Moreover, last year’s quarter included charges related to pension-settlement.
The company slashed marketing, research and general costs by 2.5 percent.
Kimberly-Clark’s personal-care unit reported sales of $2.28 billion, down 1.2 percent from last year, as currency rates hurt sales by 6 percent. In consumer tissue, sales slipped 0.3 percent to $1.49 billion, while volumes surged 3 percent.