Kimberly-Clark results miss estimates as boost from price hikes fade

(Reuters) - Kleenex tissue maker Kimberly-Clark missed expectations for fourth-quarter sales and profit on Wednesday as price-hike benefits soften, sending the company's shares down 4.6%.

The company also warned that weak retail inventories could lead to flat volumes in the first quarter, adding that it expects pricing to be up about 2% in 2024 compared with a 9% rise the year before.

"Contribution of pricing to help offset the record inflation ... has already started receding," Kimberly-Clark CEO Mike Hsu said on a post-earnings call.

While inflation has retreated from its peak, particularly in the United States, still-high costs are putting a strain on personal spending.

Kimberly-Clark said it expects organic sales to grow in the low to mid-single digit range in 2024 and volume growth to pick up as the year progresses.

The company also forecast high-single digit growth in adjusted earnings per share for 2024. Analysts had expected profit to grow 7.5%, according to LSEG data.

"2024 guide is realistic and lower ... but the market doesn't love back-end loaded earnings progression," Evercore ISI analyst Javier Escalante said.

Consumer goods companies such as Kimberly-Clark, P&G and Unilever have had to contend with cheaper private label brands eating into their shelf space.

Kimberly-Clark's gross margin rose by 210 basis points in the fourth quarter as easing costs of raw materials helped soften the blow from higher manufacturing and labor costs and unfavorable currency exchange rates in some markets.

For larger rival P&G, strong demand and still-high prices of its products mainly in Europe helped boost gross margin in its quarterly results on Tuesday.

Kimberly-Clark's fourth-quarter net sales came in at $4.97 billion, compared with estimates of $4.98 billion. Adjusted earnings of $1.51 per share missed expectations of $1.54.

Organic sales rose 3%, compared with a 5% rise a year earlier.

(Reporting by Juveria Tabassum in Bengaluru; Additional reporting by Granth Vanaik; Editing by Milla Nissi and Shounak Dasgupta)

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