Kimberly-Clark Corporation ( NYSE: KMB ) shares slipped more than 3% in premarket trading on Tuesday despite posting better-than-expected earnings results on the day.
The Kleenex-parent notched non-GAAP EPS of $1.34 for the quarter alongside $5.1B in revenue. Those figures pushed past estimates by $0.03 and $110M, respectively. Net selling prices increased 9% in the quarter, buoying the bottom line for the consumer staples company.
Additionally, management raised organic sales growth forecasts to a range of 5% to 7% compared to prior outlook of 4% to 6%.
However, expected cost increases and pessimistic profit guidance moving forward appeared to overshadow the headline beat.
"Our results also reflect ongoing market volatility and significant input cost inflation,” CEO Mike Hsu explained. “We continue to be thoughtful with our response to inflation, focusing on providing value to our consumers while leveraging price and cost discipline to mitigate macro headwinds for margin improvement over time."
Moving forward, adjusted operating profit is projected to be down by a mid-single digit percentage, versus estimate of low to mid-single digit declines, and “key cost inputs” are expected to increase $1.4 to $1.6B, $300M greater than previously expected.
“Costs are projected to increase or remain elevated for most inputs, including pulp and other raw materials as well as distribution and energy,” the earnings release stated. “Adjusted earnings per share remains $5.60 to $6.00. Given the current cost outlook, expect to be at the lower end of the range.”
The lower end of guidance could disappoint against the analyst consensus of $5.73, likely abetting the share erosion in premarket hours. Shares slipped 3.01% shortly before Tuesday’s open.
Read more on cost concerns confronting consumer staple companies .
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Kimberly-Clark stock slides as cost concerns overshadow strong sales