Kimberly-Clark reported net sales in the third quarter decreased 1.7% to $4.9 billion, as the effect of weaker foreign currency exchange rates more than offset organic sales growth of about 3%. The growth in organic sales was driven by higher net selling prices, which increased approximately 3%, while overall sales volumes were essentially even with year-ago levels. Sales volumes continue to reflect challenging economic conditions, particularly affecting the company’s K-C Professional and Consumer Tissue businesses in North America and Europe, along with the company’s focus on improving net realized revenue. Meanwhile, sales volumes rose approximately 18% for
K-C’s global Health Care business and about 3% for the company’s operations in developing and emerging markets.
Chairman and CEO Thomas J. Falk said, “We delivered outstanding third quarter results in a challenging environment, while maintaining a strong focus on doing what’s right to sustain our long-term growth. Third quarter performance was highlighted by strong margin expansion in each of our four business segments, record earnings per share and excellent cash flow. We realized sizable benefits from improved net realized revenue, and our strategy of driving efficiency in every aspect of our operations led to another quarter of significant cost reductions as well as overhead efficiencies. At the same time, we continued to deliver on our targeted growth initiatives, with double-digit organic top-line growth in developing and emerging markets and excellent results in Health Care.”
In the third quarter, sales of personal care products decline 0.7% compared with the third quarter of 2008. Although net selling prices increased 5% and sales volumes advanced about 1%, weaker currencies reduced sale by 6% and changes in product mix reduced sales by about 1%.
Personal care sales in North America decreased nearly 1% versus the third quarter of 2008. Although net selling prices advanced approximately 2%, sales volumes fell 2% and currency effects reduced sales by 1%. The higher selling prices resulted from increases implemented during 2008 in most product categories. Sales volumes for Huggies diapers fell about 3%, and volumes for the company’s child care brands were down about 7%, reflecting continued category softness. Nonetheless, the company’s third quarter market share in both categories were even with year-ago levels. In other areas of the business, sales volumes for Huggies baby wipes decreased about 5% compared to double-digit growth in the year-ago period, and volumes for Kotex feminine care products were also down about 5%. Lastly, volumes for K-C’s adult incontinence brand rose 10%, including benefits from product innovation on the Depend brand launched earlier in the year.
In Europe, personal care sales declined about 9% in the quarter, as unfavorable currency exchange erases reduced sales by more than 12%. Sales volumes rose nearly 7%, while net selling prices were down about 2% and changes in product mix reduced sales by more than 1%. The volume gains reflect continued strong performance for Huggies diapers in Central Europe, along with solid improvement in the company’s four core markets of the U.K., France, Italy and Spain. In addition, sales volumes for Huggies baby wipes increased at a double-digit rate in the third quarter.
In developing and emerging markets, personal care sales increased 2%, as continued double-digit growth in organic sales was mostly offset by negative currency effects of 11%. Net selling prices improved about 10% and sales volumes rose 4%, while changes in product mix reduced sales by about 1% in the third quarter. The growth in organic sales was broad-based, with particular strength in Argentina, Brazil, China, Russia, South Africa, South Korea, Turkey and the Andrean region in Latin America.