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K-C Unveils Second Quarter Results

September 1, 2009

Personal care products giant Kimberly-Clark reported $4.7 billion in net sales for the second quarter of 2009, a drop of 5.6%. The effect of weaker foreign currency exchange rates more than offset organic sales growth of nearly 3%. The growth in organic sales was driven by higher net selling prices, which increased approximately 5%, partially offset by a decline in overall sales volumes of about 2%. The lower sales volumes reflect continued challenging economic conditions, particularly affecting the company’s K-C Professional and Consumer tissue businesses, along with the company’s focus on improving net realized revenue. Meanwhile, sales volumes rose approximately 14% for K-C’s global Health Care business.

In the personal care product segment, sales declined 2% compared with the second quarter of 2008. Net selling prices increased about 6%, and the product mix improved approximately 1%, while wea­ker currencies reduced sales 9%. Sales volumes were even with the prior year. K-C also revealed that personal care sales in North America decreased 4% versus the second quarter of 2008. Although net selling prices advanced approximately 2%, sales volumes fell more than 4% and currency effects reduced sales by 1%. According to K-C, the higher selling prices resulted from increases implemented during 2008 across all categories, due to increased competitive promotional activity, mainly for Huggies diapers. Sales volumes for Huggies diapers fell about 7% compared to double-digit growth in the year-ago period, and volumes for the company’s childcare brands were down about 6%, reflecting continued category softness. In the baby and child care categories, volume performance was in line with K-C’s expectations and second quarter market shares in both categories improved sequentially from first quarter levels.

Meanwhile, in other areas of K-C’s business, sales volumes for Huggies baby wipes were up at a double-digit rate in the second quarter, while volumes for K-C’s feminine care and adult incontinence brands fell about 4%.

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