Earnings to remain pressured
We expect Kimberly-Clark’s (KMB) bottom line to register a YoY decline in the first quarter of 2019. Adverse currency rates, lower organic volumes, and cost headwinds are expected to hurt Kimberly-Clark’s bottom line. Also, Kimberly-Clark’s bottom line is expected to take a hit from an increase in the effective tax rate.
Higher packaging and raw material costs have negatively impacted the margins of consumer packaged goods manufacturers in the past several quarters. We expect higher input costs and lower organic volumes to more than offset the benefits from higher pricing and cost savings and adversely impact the margins of these companies, and in turn, their EPS growth rate.
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Analysts expect Kimberly-Clark to post adjusted earnings of $1.54 per share in the first quarter of 2019, which implies a YoY decline of 9.9%. Weakness in the top line and margin contraction are expected to lower the bottom line. Also, higher taxes are expected to remain a drag.
In comparison, Colgate-Palmolive’s (CL) earnings are also projected to decline in the first quarter of 2019, reflecting lower sales and margins. Meanwhile, Procter & Gamble’s (PG) bottom-line growth is likely to decelerate to the low single digits.