Kimberly-Clark Corp. (NYSE: KMB – $124.68) reported second-quarter net profit of $531 million down from $566 million in the same period a year ago. Excluding non-recurring items, the consumer products company, with brands including Kleenex, Huggies, Scott’s and Kotex, said adjusted earnings per share came to $1.53, beating the consensus of $1.49 but three cents lower than last year’s second period. Revenue fell 1% to $4.55 billion from $4.59 billion, but in line with analysts’ expectations of $4.56 billion. Personal care revenue declined slightly to $2.3 billion, while consumer tissue revenue declined 2% to $1.5 billion. Organic sales fell 2% in North American consumer products, reflecting category softness, less promotion shipments and competitive activity. Outside North America, organic sales declined 3% in developed markets and rose 2% in developing and emerging markets. The company cut its 2017 sales outlook to be “similar, or up slightly” from a year ago, compared with its previous outlook of up 1% to 2%. The company now expects 2017 earnings per share to be at the low-end of its target range of $6.20 to $ 6.35.
Dallas-based Kimberly-Clarks’ long-term sales growth is likely to be helped by expansion in non-traditional categories and the company’s focus on emerging markets, as well as innovation that will allow it to raise prices selectively. The shares have conservative luster, and may tempt investors seeking equities with good risk-adjusted income appeal. The stock yields 3.13% at current quotations and dividends should grow commensurate with cash flow at about 4% annually.