UPDATE 3-Kimberly-Clark profit up; sales outlook is trimmed

* Q2 EPS $1.20 vs Street view $1.13

* Revenue up 2.8 pct to $4.86 bln vs Street view $4.95 bln

* Reaffirms 2010 EPS outlook, but trims sales forecast

* Shares up 0.5 percent
(Recasts first sentence, adds analyst comments, stock action,

By Ben Klayman

DETROIT, July 23 (BestGrowthStock) – Kimberly-Clark Corp (KMB.N: )
posted a quarterly profit that beat Wall Street expectations
due to cost cuts and lower expenses, but trimmed its full-year
sales outlook and warned of higher-than-expected costs for
materials like pulp.

The company, known for Kleenex tissues and Huggies diapers,
stood by its profit outlook for the year and said it remains on
track with its full-year plan despite the tough economic
climate. Its shares were up 0.5 percent in early trading.

Kimberly-Clark still expects marketing spending in 2010 to
rise at a faster pace than sales, but see organic sales —
which exclude currency fluctuations and acquisitions — picking
up in the second half. Household products makers are ramping up
marketing spending as they battle for shoppers’ attention.

“They beat consensus, but a lot of that came from below the
operating line,” said Edward Jones analyst Jack Russo, who has
a “buy” rating on the stock.

“The tax rate was lower and nonoperating items helped out,”
he added. “They did lower sales guidance. They’re in some tough

Russo called it a mixed quarter and said the company will
struggle with comparisons to last year, when it benefited from
strong sales of items related to the H1N1 flu.

“What you saw in the second quarter is what you’re going to
see the rest of the year,” he said.

Net income in the second quarter rose almost 24 percent to
$498 million, or $1.20 a share, compared with $403 million, or
97 cents a share, in the year-earlier period. Analysts polled
by Thomson Reuters I/B/E/S had expected $1.13 a share.

Sales rose 2.8 percent to $4.86 billion, but that was below
the $4.95 billion analysts had expected. Organic sales rose 2
percent due to higher prices and strong demand overseas.

Kimberly-Clark, which competes against powerhouse Procter &
Gamble Co (PG.N: ) in such categories as diapers, tissues and
tampons, still expects full-year earnings per share to likely
come in toward the low end of its forecast of $4.80 to $5.00.

However, the company cut its sales outlook, saying it now
expects 2010 sales to rise 3 percent to 5 percent, instead of 4
percent to 6 percent.

Analysts were expecting a full-year profit of $4.78 per
share on sales of $19.8 billion.

Kimberly-Clark also cut the low end of its expected organic
sales growth rate for the year by a percentage point, saying it
now expects growth of 2 percent to 4 percent. It cuts its
expected volume growth rate by one percentage point, to a range
of 1 percent to 2 percent.

The company increased its target for share repurchases this
year by $200 million, to a range of $700 million to $800

Kimberly-Clark said full-year material costs will be higher
than initially expected due to increased costs for items like
virgin pulp and polymer resin. But it also expects pulp costs
will start to fall from quarter to quarter in the second half.

It raised its target for cost savings to at least $300
million from a prior forecast of $200 million to $250 million.
It said full-year spending will be at the low end or possibly
below its targeted range of $1 billion to $1.1 billion.

The company’s shares were up 31 cents to $63.27 in early
trading on the New York Stock Exchange.

Stock Investing

(Reporting by Ben Klayman, editing by Gerald E. McCormick and
John Wallace)

UPDATE 3-Kimberly-Clark profit up; sales outlook is trimmed