Personal Care witnessed muted sales
Kimberly-Clark’s (KMB) Personal Care segment, which accounts for ~50.0% of the company’s total sales, remained muted in 2Q17. Sales of $2.3 billion fell marginally on a YoY (year-over-year) basis as lower net selling prices offset an improved product mix. The segment’s sales in North America fell 1.0% due to lower volumes. Weakness in category growth and increased competition resulted in lower volumes.
The company’s total volumes in the baby and child care category fell in the mid-single digits due to a lower demand for Huggies diapers. However, baby wipes and adult care volumes rose in the mid-single digits and low-single digits, respectively. Other consumer product companies, including Procter & Gamble (PG) and Colgate-Palmolive (CL), are also seeing lower sales in North America.
However, the segment’s sales in emerging markets rose 3.0%, reflecting higher volumes and favorable currency movements. But lower net selling prices in China (FXI) and Eastern Europe remained a drag. Sales fell 7.0% in other developed markets such as South Korea, Australia, and Western and Central Europe, reflecting lower volumes and reduced selling prices.
Consumer Tissue segment continues to fall
Sales in the Consumer Tissue segment fell 2.0% to $1.5 billion in 2Q17, reflecting a fall in volumes and lower pricing. Lower promotional shipments impacted the segment’s performance in North America. The top line fell 5.0% in other developed markets due to lower volumes in Western and Central Europe. Net sales rose 6.0% in emerging markets due to improved volumes and currency tailwinds.
K-C Professional sales improved marginally
For Kimberly-Clark’s K-C Professional segment, sales increased slightly by 0.50% in 2Q17. Improvements in volume and product mix were offset by currency headwinds and lower selling prices.
Given Kimberly-Clark’s weak performance in the first half of 2017 and the persisting challenges, management has lowered its 2017 sales guidance. The company now expects organic sales to remain flat or increase marginally for the year. Earlier, management projected a 1.0%–2.0% improvement in organic sales for 2017.