Kimberly-Clark Corp. Q2 2010

July 23, 2010 by timbercommunity

Organic sales growth was 2% including continued strong results for K-C International. Operating margin improved to 170 basis points, leading to a 24% increase in earnings per share and third, they continue to be focused on driving those factors they control, delivering strong cost savings holding down working capital and increasing investments behind the brands. The second quarter market shares improved sequentially from the first quarter and several of their categories in North America including diapers.

Sales increased to about 3% to $4.9 billion including one point of growth from acquisitions. Organic sales rose 2% driven by higher net selling prices or sales volumes.

Personal care, organic sales increased approximately 4%. Sales volumes were up more than 2% and higher net selling prices contributed an additional point of growth. North America organic sales increased about 6%, sales volumes were up 3% and higher net selling prices driven by a lower level of promotional activity on Huggies diapers contributed two points of growth.

Improved product mix generated an additional point of growth. Feminine care volumes increased double digits for the second consecutive quarter as a result of the U by Kotex innovation.

Adult care volumes were also up double digits with benefits from recent innovations and supporting marketing campaigns. Huggies diaper volumes were down slightly in the quarter. In the Europe personal care organic sales were down 3%, sales volumes were down 1% compared to a double digit increase last year, while product mix and net selling prices were each down slightly.

For K-C International personal care’s organic sales rose about 6%. Sales volumes were up 5%, with strong volume growth in a number of markets including Australia, China and throughout most of Latin America. Overall net selling prices advance 1% has increases in Venezuela were mostly offset by modest declines elsewhere.
Turning to consumer tissue, organic sales were down about 2%, higher net selling prices of 2% and one point of improved product mix were more than offset by lower volumes of 5%.
North America organic sales were off approximately 5% and selling prices increased 2%, mostly from sheet count reductions and Cottonelle bath tissue in the first quarter to improve net realized revenue. Product mix was also up two points in the quarter. Sales volumes declined 9% were impacted by the sheet count reductions at Cottonelle, consumer trade down in paper towels and competitive promotional activity.
Expect better volume performance in the back half of the year, taking into account the timing of marketing and promotional activity and the fact that the volume impact of count reduction should fade over time.
Switching to Europe, consumer tissue organic sales were down about 3% in a continued difficult environment. Sales volumes were down 2% and product mix was off an additional point. For K-C International, consumer tissue organic sales have increased more than 4%, driven by higher net selling prices.
 
The overall impact from Venezuela was roughly a point negative on sales volumes and one point positive on net selling prices. These impacts were more significant than our previous expectations. Going forward, in the near term they are assuming a continued challenging environment and so Venezuela is a factor that’s contributing to our updated organic growth assumptions which are included in our news release.