REFILE-UPDATE 2-Kimberly-Clark benefits from rival's problems, severe flu

Fri Apr 19, 2013 2:02pm EDT

(Adds dropped word "of" in paragraph 2)

* 1st-quarter $1.48 EPS tops Wall Street view $1.34

* Raises 2013 profit forecast to $5.60 to $5.75, excluding items

* Flu helped Kleenex sales in North America

* Shares hit record high of $105.83

By Jessica Wohl

April 19 (Reuters) - Kimberly-Clark Corp posted a bigger-than-expected jump in first-quarter earnings and raised its forecast for the year on Friday as the maker of Kleenex tissues got a boost from a severe flu season and a toilet paper rival's supply problems.

Kimberly-Clark, whose shares hit an all-time high of $105.87 on Friday, sold more of its Cottonelle toilet paper in the first quarter partly because of a supply problem at Georgia Pacific, which makes Angel Soft and Quilted Northern toilet paper.

The privately held Georgia Pacific said on Friday that the problem occurred at its Arkansas and Louisiana plants as they implemented $500 million in new paper-making technology. It said the glitch is having a short-term impact on its supply of Quilted Northern toilet paper.

Kimberly-Clark said the amount of Kleenex tissues it sold in North America rose by a low double-digit rate during the first quarter, aided by a severe flu season. A year earlier, when there was a weaker flu season, Kleenex volume was down.

PROFIT TOPS VIEW

Like its competitors, Kimberly-Clark has been looking for ways to improve operations and cut costs. It is getting out of some low-profit businesses in Europe and already restructured its pulp and tissue business. Kimberly-Clark, Procter & Gamble Co, Energizer Holdings Inc and Colgate-Palmolive Co all cut thousands of jobs as part of their previously announced plans.

Excluding items such as restructuring costs, Kimberly-Clark earned $1.48 per share, well ahead of the analysts' average forecast of $1.34, according to Thomson Reuters I/B/E/S.

Net income rose to $531 million, or $1.36 per share, from $468 million, or $1.18 per share, a year earlier.

Sales rose 1.5 percent to $5.32 billion, topping the analysts' forecast of $5.28 billion.

Healthcare, the company's smallest unit, posted a 2 percent drop in sales and a 17 percent drop in profit. Chief Executive Thomas Falk attributed some of the pain at that unit to a 4 percent drop in U.S. surgery admissions in the first quarter. The company said it did not know what caused that decline.

RAISES FORECAST

Kimberly-Clark said it expected to post 2013 earnings per share of $5.60 to $5.75, excluding items, versus its prior target of $5.50 to $5.65. The analysts' average forecast is $5.59.

Kimberly-Clark shares were up 4.3 percent at $105.70 on Friday afternoon, after hitting the all-time high.

Shares of the company had risen 20 percent from the beginning of the year heading into Friday's report, outperforming shares of larger P&G, which were up 17.6 percent over the same period.

For now, analysts are largely telling investors to sit on the sidelines because Kimberly-Clark shares are already trading at a high valuation, with nine of 18 that track the company giving it a "hold" rating, according to Thomson Reuters data. Four give it the equivalent of a "buy" or "strong" buy rating.

Kimberly-Clark said it cut $85 million in costs during the quarter and is on track to cut a total of $250 million to $300 million in costs this year.

While the company has been cutting some expenses, materials and distribution costs rose in the quarter. Input costs were up $35 million from a year earlier, with increases of $15 million for fiber, $10 million for other raw materials and $10 million for distribution, it said. (Reporting by Jessica Wohl in Chicago; editing by John Wallace, Lisa Von Ahn and Matthew Lewis)

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