Kimberly-Clark Corp. (NYSE: KMB – $125.71) the maker of Huggies diapers and Kleenex tissues, reported lower first-quarter sales around the globe despite higher volumes in many regions and categories. Currency volatility due to the strong dollar was the biggest drag in most regions outside the U.S. Competition in China was particularly evident in the lucrative diaper market where Kimberly-Clark’s organic sales, which strips out the effects of currency moves and acquisitions, rose 5% for the period compared with a 35% increase a year ago. Elsewhere around the world, Kimberly-Clark benefited from an improving U.S. economy, noting that American consumers have been willing to shell out more for items like improved diapers driving sales up 3% across the company’s product lines. In all, worldwide sales slipped 4.6% from a year earlier to $4.48 billion, falling short of the $4.54 billion analysts projected. But the company took costs out of its operations and earnings were helped by a lower tax rate. Thus KMB was able to report a profit of $545 million, or $1.50 a share, up from $468 million, or $1.27 a share, a year earlier, but a penny below Street estimates.
While the stock price for KMB is up over 16% over the past twelve months, the results were not welcomed by traders putting pressure on the shares. The shares are not cheap at current levels and any “less than stellar” results will take its toll on the bidding. Nonetheless, for those investors with an eye on income (yield 2.8%), the shares remain a solid long-term investment.