UPDATE 3-Kimberly-Clark profit falls, cuts full-year view

* Q3 EPS $1.02 before items; Wall Street view $1.01

* Sales up 8.2 percent to $5 bln

* Trims full-year profit view to $4.15-$4.20 per share

* Shares fall as much as 8.8 pct (Adds comments from CEO, analyst; updates stock activity)

By Jessica Wohl

CHICAGO, Oct 22 (Reuters) - Kimberly-Clark Corp (KMB.N) posted a lower quarterly profit and cut its full year forecast on Wednesday, hurt by higher costs and consumers becoming thriftier amid the economic downturn and its shares fell.

While the maker of Huggies diapers and Kleenex tissues is finally seeing some relief in commodity prices, it faces new pressures from exchange rates and growing fears of a global recession.

Kimberly-Clark estimated that recent changes in currency exchange rates, including currency translation at Kimberly- Clark de Mexico (KIMBERA.MX), Mexico's top paper products company, will cut 10 cents to 15 cents per share from fourth- quarter profit.

Besides the Mexican peso, Kimberly-Clark said it is feeling pressure from currencies, including the Australian dollar and the South Korean won.

Kimberly-Clark's third-quarter profit fell to $413.1 million, or 99 cents per share, from $453.1 million, or $1.04 a share, a year earlier.

Excluding items, earnings were $1.02 a share, 1 cent ahead of an average Wall Street forecast of $1.01 per share, according to Reuters Estimates.

Sales rose 8.2 percent to $5 billion, driven by price increases across all four of its units. Volume fell less than 1 percent.

"Lower volume should not be a huge surprise in this environment, but it seems to underscore the view that (Kimberly-Clark) is not immune to the issues of the day," Merrill Lynch analyst Christopher Ferrara said in a research note. He rates the shares "underperform."

Kimberly-Clark expects fourth quarter sales to rise due to price increases and some higher-end products, while volume "will likely be relatively weak," either up or down a small amount, Chairman and Chief Executive Thomas Falk said during a conference call.

Kimberly-Clark said costs for materials, energy and distribution were about $250 million higher than a year ago, the highest quarterly cost inflation it has ever faced.

Falk said it could take up to six months before the lower commodity costs are fully realized in the company's results.

CONSUMER SPENDING CHANGES

In North America, consumer tissue product sales fell 2 percent and volume fell 9 percent as the company raised prices on items such as Cottonelle toilet paper and consumers switched to store brand paper towels from its Viva and Scott brands.

There has also been a big shift to private label toilet paper in the United Kingdom, where the company's Andrex is a market leader, Falk said.

"The whole bathroom tissue category was down, which was kind of unheard of," Falk said of the UK.

Consumers are using up products they have at home rather than stocking up on big packages and waiting for paychecks before they buy more items.

"You're seeing that shift in consumer behavior during a pay period cycle more than we maybe have in the past," he said.

Falk said Kimberly-Clark has also seen some consumers leaving their children in diapers longer and suggested that may be because diapers are less expensive than training pants.

Kimberly-Clark cut back on production at some plants during the quarter as it tries to not run up a high level of inventory. If volume is weak in the fourth quarter, the company will probably take more downtime, particularly in consumer tissue, which could continue into 2009 depending on how things play out, Falk said.

The company said it may fall short of its target to cut $200 million to $250 million in costs this year, while its capital spending plans are on track.

The company spent $25 million more on marketing in the third quarter than a year earlier as it tries to keep consumers from switching to lower-priced products. It plans to spend more on marketing and working on its relationships with retailers.

Kimberly-Clark has also been shutting facilities and cutting staff under a 2005 plan set to end this year.

The company expects to earn $4.15 to $4.20 per share this year, excluding certain items, versus a previous forecast of $4.20 to $4.30. Analysts had expected $4.23 per share.

Kimberly-Clark forecast fourth quarter adjusted earnings of $1.02 to $1.07 per share. Analysts had expected $1.11.

Kimberly-Clark shares were down $4.21, or 6.8 percent, at $57.46 in the afternoon after falling to $56.25 in morning trading.

Through Tuesday, Kimberly-Clark shares had fallen nearly 11.1 percent so far this year, while the shares of larger rival Procter & Gamble Co (PG.N) dropped 14.2 percent. (Reporting by Jessica Wohl; editing by Derek Caney and Andre Grenon)