Kimberly-Clark Profit Falls on Costs

Kimberly-Clark Corp. (KMB), maker of Kleenex tissues and Scott paper towels, said Tuesday fourth-quarter earnings tumbled 17 percent as one-time costs cut into profits, offsetting higher revenue.

Earnings fell to $371.1 million, or 79 cents per share, from $445.3 million, or 91 cents per share, a year ago. Sales edged up 3 percent to $4.01 billion from $3.9 billion.

After the news, the company's stock fell $1.41, or 2.4 percent, to $58.30 in early trading on the New York Stock Exchange.

Stripping out one-time items such as a tax provision for repatriating foreign profits and certain accounting adjustments, Kimberly-Clark said its fourth-quarter earnings per share would have increased 3 percent to 95 cents per share.

Analysts, on average, expected the company to post adjusted earnings of 95 cents per share on sales of $4.07 billion, according to Thomson Financial.

For the full year, Kimberly-Clark's earnings declined 13 percent to $1.57 billion, or $3.28 per share, from 2004's profit of $1.8 billion, or $3.61 per share. Annual earnings from continuing operations fell 11 percent to $1.58 billion, or $3.31 per share, from $1.77 billion, to $3.55 per share.

Full-year 2005 sales increased 5 percent to $15.9 billion from $15.08 billion.

"Even though we had to absorb cost inflation of approximately $400 million in 2005 — more than double the level expected heading into the year — we stepped up our brand-building efforts, investing about $90 million in incremental marketing and research expenses," Chairman and Chief Executive Thomas Falk said in a statement.

Looking ahead, Falk said the company expects to face continued inflationary pressures while anticipating cost-savings under existing initiatives of up to $250 million. The company is forecasting 2006 earnings, excluding unusual items such as charges, in the range of $3.85 to $3.95 per share.

For the first quarter, the Irving, Texas-based company expects adjusted earnings of 90 cents to 93 cents per share, including stock option costs.

Wall Street has projected a 2006 adjusted profit of $3.95 per share and first-quarter earnings of 95 cents per share.