Kleenex tissue maker Kimberly-Clark has raised its forecast for full-year profit after beating Wall Street estimates for second-quarter profit, betting on higher prices and steady demand for its personal care products.
Demand for Kimberly-Clark's products including those for skin health and hygiene held steady, as consumers grappling with rising costs of living prioritised shopping for essentials and helped in lifting its volumes.
The company continues to see resilient purchase patterns and healthy volumes in its product categories without a lot of trade down, said Chris Jakubik, head of Kimberly Clark's investor relations told Reuters.
Increased innovation in products and supply improvements helped Kimberly-Clark in lifting volumes by 3% in its personal care business, a major revenue contributor, which dropped 3% last year.
Quarterly Highlights
The company's overall volumes rose 1% in the quarter, while its prices were up 2%.
For the full-year the company expects earnings per share to grow at a mid-to-high teens percentage rate, up from the previously expected low-teens percentage rate.
Benefits from increasing its prices to 6% in its personal care business coupled with an 8% growth in organic sales helped offset higher input costs such as manufacturing and supply-chain related investments and expand its margins by 290 basis points to 36.9%
On an adjusted basis, the Huggies diaper maker's profit of $1.96 per share for the quarter ended 30 June, topped analysts' estimates of $1.71 per share, as per LSEG data.
However, due to retailer inventory reductions in North America, its major revenue generating region, the company maintained its annual organic sales forecast and posted quarterly sales of $5.03 billion (€4.6 billion), missing analysts' estimates of $5.10 billion (€4.7 billion).
It continues to project annual organic sales to grow at a mid-single digit rate.
In April of this year, Kimberly-Clark raised annual sales and profit forecasts after topping first-quarter expectations.
