Kimberly-Clark 4Q is flat; plant closings to come

DALLAS - Kimberly-Clark Corp. reported flat fourth-quarter net income on Tuesday and unveiled restructuring plans to deal with rising costs tied to its pulp and tissue business.

The maker of Kleenex tissues and Huggies diapers also raised its dividend 6 percent and expects to buy back $1.5 billion in shares this year.

The restructuring, in which it plans to streamline, sell or close five or six plants, comes as the company contends with rising costs for wood pulp and oil, major materials for its products.

The plants involved include one in Everett, Wash., which it plans to sell, and two in Australia, chairman and CEO Thomas Falk said during a conference call.

The company employs more than 800 at a plant in Chester, Delaware County, that produces Scott toilet tissue and Scott paper towels.

Its stock added $2.07, or 3.2 percent, to $66.04 in midday trading. The shares have traded between $58.25 and $67.24 over the past year.

Kimberly-Clark did not say how many jobs the plan would affect. A call to the company, based in Dallas, was not immediately returned.

Kimberly-Clark reported net income of $492 million, or $1.20 per share, in the fourth quarter. That compares with $492 million, or $1.17 per share, a year earlier. It had more shares outstanding in last year's quarter.

Revenue for the three months ended Dec. 31 rose 2 percent to $5.08 billion.

The performance surpassed the expectations of analysts surveyed by FactSet, who forecast earnings of $1.15 per share on revenue of $5.05 billion.

At the personal care unit, revenue climbed 2 percent to $2.2 billion on rising sales of feminine care and adult care products, helped by new products under the Kotex, Poise and Depend brands, as well as baby wipes.

Consumer tissue revenue rose 4 percent to $1.7 billion on higher selling prices, helped by a cut in sheet counts.

Health care revenue declined as selling prices dropped and the company lost the benefit from last year's swine flu scare, which fueled sales of face masks.

Kimberly-Clark expects the restructuring of its pulp and tissue businesses, which will be done over two years, to cost $280 million to $420 million.

The company expects the changes will lower its 2013 revenue by about $250 million to $300 million but raise its operating profit by at least $75 million a year.

Kimberly-Clark also plans to shed some products, mostly nonbranded items, and transfer some production to lower-cost plants to boost profitability.

The company is dealing in part with competition from less expensive store brands, which increased during the economic downturn. Many consumers are still trading down to cheaper items as they contend with high unemployment and a dismal housing market.

Citi analyst Wendy Nicholson was bullish.

"With a solid close to the year and an outlook for a better 2011, Kimberly-Clark is back on firm footing (after higher pulp prices pressured results in 2010)," she wrote in a note to clients.

The company's board increased its quarterly dividend to 70 cents from 66 cents. The dividend will be paid on April 4 to shareholders of record on March 4.

For the full year, net income fell 2 percent to $1.84 billion, or $4.45 per share, from $1.88 billion, or $4.52 per share. Adjusted earnings were $4.68 per share, which excludes a first-quarter charge for a balance sheet change in Venezuela related to that country's currency devaluation.

Revenue increased 3 percent to $19.75 billion.

Kimberly-Clark predicts 2011 adjusted earnings of $4.90 to $5.05 per share, excluding costs related to the restructuring. Analysts expect $5.03 per share for the year.

The consumer products company expects annual revenue will climb between 3 percent and 4 percent.

Falk said Kimberly-Clark anticipates some difficult market conditions during the first half of the year, particularly as U.S. unemployment remains high. But the company believes demand could improve as 2011 progresses.