Kleenex tissue maker Kimberly-Clark raised its forecast for full-year profit on Tuesday after beating Wall Street estimates for second-quarter profit.
The personal care company raised its guidance betting on higher prices and steady demand.
Consumers grappling with the high cost of living prioritised shopping for essentials, lifting volumes for Kimberly-Clark and maintaining demand.
The company continues to see resilient purchase patterns and healthy volumes in its product categories without a lot of trade down, according to the head of Kimberly-Clark’s investor relations Chris Jakubik.
Innovation And Volumes
Increased innovation in products and supply improvements helped Kimberly-Clark lift volumes by 3% in its personal care business – a major revenue contributor – which dropped 3% last year.
The company’s overall volumes rose 1% in the quarter, while its prices were up 2%.
For the full-year, the company expects earnings per share to grow at a mid-to-high-teens percentage rate, up from the previously expected low-teens percentage rate.
Benefits from increasing its prices to 6% in its personal care business paired with an 8% growth in organic sales helped offset higher costs.
The increases helped combat manufacturing and supply chain costs, as well as expanding the company’s margins by 290 basis points to 36.9%.
On an adjusted basis, the Huggies nappy maker’s profit of $1.96 per share for the quarter ending 30 June topped analysts’ estimates of $1.71 per share, according to London Stock Exchange Group data.
However, due to retailer inventory reductions in North America – its major revenue generating region – the company maintained its annual organic sales forecast.
It posted quarterly sales of $5.03 billion, missing analysts’ estimates of $5.10 billion.
It continues to project annual organic sales to grow at a mid-single digit rate.
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