Quarterly revenue rose 4.2% to $4.07 billion. The company said it had to absorb $90 million in higher costs. About one-third was driven by higher costs for polymer resins, absorbents and other oil-based materials, and another third by energy costs. Fiber, higher taxes and the cost of expensing stock-based compensation also sapped profits.
K-C is in the process of raising prices on feminine care products by an average of 5-6%. Average selling prices for personal care items fell 1% in the first quarter, however, partly because of a price increase that didn't stick. Late last year, rival Procter & Gamble rolled back price increases on diapers, forcing K-C to follow suit.
Analysts say another concern for Kimberly-Clark is the recent announcement by Wal-Mart that it plans to cut inventory in U.S. stores, which could cause the world's largest retailer to buy fewer diapers and paper towels.
Kimberly-Clark said it saw double-digit sales gains during the first quarter in developing countries and sold more diapers and healthcare products in North America and Europe. Executives said a number of new products are selling briskly, including new Pull-Ups training pants and a line of Huggies toiletries.
The company is cutting jobs and said it has notified employees at 18 of the 24 plants scheduled for sale, closure or streamlining.