WASHINGTON (dpa-AFX) - Healthcare products maker Kimberly-Clark Corp. (KMB) Tuesday reported third-quarter results that topped estimates. Further, the company reduced its earnings outlook for the year, assuming the spin-off of its health care business occurs at the end of October.
Additionally, the company announced a restructuring program that would lead to the elimination of up to 1,300 jobs.
Net income attributable to the company rose to $562 million or $1.50 per share from $546 million or $1.42 per share in the year-ago quarter.
Adjusted earnings per share totaled $1.61, while it was $1.44 last year, benefiting from organic sales growth, cost savings and a lower share count, amid input cost inflation, adverse currency, a higher adjusted effective tax rate and lower net income from equity companies.
On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $1.54 per share for the quarter. Analysts' estimates typically exclude special items.
Sales grew 3 percent to $5.44 billion from $5.26 billion in the year-ago period. Analysts expected revenues of $5.36 billion for the quarter.
Organic sales rose 4 percent, including a 10 percent increase in K-C International, with volumes and net selling prices rising 2 percent each.
In Personal Care Segment, net sales rose 4 percent to $2.5 billion. While, net selling prices rose 3 percent, organic volumes increased 2 percent and product mix improved slightly.
Consumer Tissue Segment's sales grew 4 percent to $1.7 billion, amid organic sales growth and cost savings.
In K-C Professional or KCP Segment, sales increased 4 percent to $0.9 billion.
Health Care Segment reported sales of $0.4 billion, down 3 percent from last year, primarily due to lower net selling prices.
In November 2013, Kimberly-Clark said it was pursuing a tax-free spin-off of its health care business. The spin-off will create a stand-alone, publicly traded health care company named Halyard Health, Inc.
Considering the pending spin-off of the health care business, the company lowered its full year adjusted earnings per share forecast to a range of $5.93 to $6.03 per share from its prior range of $6.00 to $6.15 per share. Analysts project annual earnings per share of $6.07.
Additionally, the company said it is initiating a restructuring program to improve organization efficiency and offset the impact of stranded overhead costs resulting from the health care spin-off. As a result, workforce reductions in the range of 1,100 to 1,300 are expected, and primarily impact salaried employees.
The restructuring is expected to cost $130 million to $160 million after-tax and generate cumulative pre-tax savings of $120 million to $140 million.
The company expects $85 million to $105 million of the after tax charges will occur in the fourth quarter, while savings from the restructuring are not anticipated to be significant until 2015.
KMB closed up 1.7 percent on Monday at $108.04.
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