Household and professional products provider Kimberly-Clark Corp. (NYSE: KMB – $130.15) reported first quarter sales of $4.48 billion – even with the prior year, but shy of estimates closer to $4.5 billion. Organic sales were down 3% in North American, reflecting category softness, competitive activity and less promotional shipments. Sales, however, increased 4% in developing and emerging markets. Net income per share was $1.57 vs. $1.53 a year ago and two cents ahead of Street estimates. The company’s Personal Care Segment, which provides about half of total sales and includes Huggies, Kotex and Baby Wipes, showed strong gains in emerging markets, which were offset by developed markets including North America. Likewise, the Consumer Tissue Segment (34 % of sales – Scott’s Towels, Kleenex, etc.) showed weakness in volumes and pricing, but again was offset by better results from emerging economies. Strong results from emerging markets helped the smaller K-C Professional Segment (16% of sales) with volume and pricing gains, offset by North America and other developed countries.
The outlook for currencies has improved, while commodity inflation has picked up somewhat and category growth continues to be relatively modest. Nonetheless, the company said full-year 2017 net sales are expected to increase 1 to 2 percent and continues to target full-year 2017 earnings per share of $6.20 to $6.35, with analysts’ views averaging $6.33. These shares are fairly valued at this juncture, but KMB holds good conservative appeal for those looking for steady income. Plus, thanks to the recent dividend hike, it offers an above average yield of 3%, indicating decent, risk-adjusted total return potential.