Kimberly-Clark Corp posted a lower quarterly profit on Monday and said this year's earnings could come in below earlier expectations as costs for pulp and other goods are rising more than twice as much as it expected.
The maker of Kleenex tissues and Huggies diapers is raising prices on a variety of products, including most of its North American consumer goods, to offset the impact of higher costs, Chief Executive Officer Thomas Falk said in a statement.
Shares of Kimberly-Clark fell 2.7 percent to $64.28 in premarket trading.
Kimberly-Clark earned $350 million, or 86 cents per share, in the first quarter, down from $384 million, or 92 cents per share, a year earlier.
Excluding certain items, earnings fell to $1.09 per share from $1.14. Analysts on average had expected $1.17, according to Thomson Reuters I/B/E/S.
Sales rose 4 percent to $5.03 billion, topping the analysts' average forecast of $4.98 billion.
Kimberly-Clark now expects materials costs to rise $450 million to $550 million this year, up from a previous assumption of $200 million to $250 million. It cited increases in everything from pulp to oil-based materials.
The company said in March that it would raise North American prices on products such as diapers and toilet paper by about 3 percent to 7 percent this year.
Kimberly-Clark announced plans in January to exit the pulp making business. It is also cutting spending to help mitigate the impact of higher costs.
The company forecast 2011 earnings of $4.80 to $5.05 per share, excluding special items, compared with its January outlook of $4.90 to $5.05.
It raised its sales growth outlook for the year to a range of 4 percent to 6 percent. In January, it had forecast an increase of 3 percent to 4 percent.
(Reporting by Jessica Wohl, editing by Maureen Bavdek and Lisa Von Ahn)