* Cutting 1,300-1,500 jobs with European changes
* Had been in European diaper market for more than 20 years
* Third-quarter earnings edge past Wall Street view
* Raises full-year profit view for second quarter in a row
* Shares down 1 percent in midday trading
(Adds CEO comments, stock activity)
By Jessica Wohl
Oct 24 Kimberly-Clark Corp plans to stop
selling its Huggies diapers in much of Western and Central
Europe as part of a plan to leave low-profit businesses in that
The maker of Kleenex tissues also reported lower quarterly
sales due to the stronger U.S. dollar, but earnings rose, and it
raised its profit forecast for the year.
Kimberly-Clark said on Wednesday it would remain in the
diaper business in Italy. It also plans to sell or exit some
lower-margin businesses, mostly in its consumer tissue unit. The
company plans to cut 1,300 to 1,500 jobs, which include closing
or selling five manufacturing plants.
"We've been in the European diaper market for more than 20
years and we've made a number of attempts to find a winning
business model there," Chairman and Chief Executive Thomas Falk
said during a conference call. "We've concluded that we can
create more shareholder value by getting out of this business
rather than by continuing to try to turn it around."
The businesses Kimberly-Clark will exit or divest generate
annual net sales of about $500 million and negligible operating
profit. The company would not identify all of the specific
markets or products those businesses entail.
Kimberly-Clark rings up more than $3 billion in European
sales each year as part of its overall sales of $20.85 billion.
The European market remains challenging, Falk said.
"We are pleased that (Kimberly-Clark) has made this
deliberate choice," said BMO Capital Markets Connie Maneaty, who
has been looking for household products companies to manage
costs better in a slow-growth environment.
Kimberly-Clark has been cutting costs and has benefited from
a decline in commodity costs, which for years had been a
pressure point for the tissue, toilet paper and diaper maker.
Still, the impact of the stronger U.S. dollar crimps overseas
sales, and the company has been spending more on marketing to
compete against larger rivals such as Pampers diaper maker
Procter & Gamble Co.
Shares of Kimberly-Clark were down 0.9 percent at $85.16 in
late morning on the New York Stock Exchange, while shares of
rival P&G were up 1.2 percent at $68.27. P&G is set to report
its results on Thursday.
Kimberly-Clark earned $517 million, or $1.30 per share, in
the third quarter, compared with $432 million or $1.09 per share
a year earlier.
Excluding restructuring costs, earnings per share rose to
$1.34 from $1.26, topping the analysts' average estimate by a
penny, according to Thomson Reuters I/B/E/S.
Sales fell 2.5 percent to $5.25 billion, missing the
analysts' average forecast of $5.35 billion. Foreign exchange
rates reduced sales by 5 percent, Kimberly-Clark said.
Organic sales, which exclude the impact of foreign exchange
rate fluctuations and sales lost due to the restructuring of the
pulp and tissue business, rose 3 percent.
The company said it expected to earn $5.15 to $5.25 per
share this year, excluding restructuring costs. In July, it had
forecast $5.05 to $5.20.
Back in January, Kimberly-Clark said 2012 would be a tough
year and set its profit target at $5.00 to $5.15 per share,
below the analysts' average estimate of $5.24 at the time. Since
then, Wall Street has cut its forecast to $5.18.
Kimberly-Clark said it expected deflation of $100 million to
$150 million in key commodity costs this year, with pulp prices
falling and oil toward the high end of the company's prior
outlook. It had previously expected key commodity costs to be
flat to down $100 million this year.
Kimberly-Clark will trim its European manufacturing and
administrative teams as part of its international overhaul.
Related after-tax restructuring costs should reach $250 million
to $350 million through 2014, the company said.
The company said it may have to take a fourth-quarter charge
depending on how many former workers participate in a plan to
receive a lump sum distribution of their pension benefits.
(Reporting by Jessica Wohl in Chicago; editing by Gerald E.
McCormick, Maureen Bavdek, Lisa Von Ahn and Matthew Lewis)