The strong dollar and plunging emerging market currencies have made 2015 a painful year for Kimberly-Clark, and the consumer goods company is not expecting the headwinds to ease in 2016.
The maker of Huggies nappies and Kleenex tissues said on Monday that it expects net sales to fall by as much as another 3 per cent this year following a 6 per cent drop in 2015.
While sales volumes were up across its key emerging markets, currencies turmoil – including the 27 per cent devaluation of the Argentine peso, a 29 per cent plunge in the Brazilian real and a near 10 per cent drop in the Mexican peso – has sharply reduced the value of those sales for the Dallas-based company.
For the year to end of December, net sales at the company fell 6 per cent to $18.6bn. Net income was down by a third to $1.1bn, or $2.77 per diluted share after the company took a $102m charge on its operations in Venezuela because of difficulties in repatriating its funds out of the country.
Kimberly-Clark said in light of another year of “significantly unfavorable currencies”, net sales are expected to be somewhere in a range between flat and down 3 per cent compared to the prior year. A negative foreign currency exchange rate impact of between 5-6 per cent is expected to negate organic sales growth of 3-5 per cent.
Shares in Kimberly-Clark, up 13.5 per cent over the past year, are down 2.5 per cent in pre-market trading.
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