Kimberly-Clark said on Monday that it expected to pay an extra $650 million to $750 million for materials such as polymer resin, superabsorbent, adhesives and other packaging materials. In April, it had expected input costs to rise $450 million to $550 million this year.
The commodity cost environment has worsened over the last three months, Chief Executive Officer Thomas Falk said in a statement.
Meanwhile, the company's Huggies diapers lost some market share in North America during the quarter. A lower birth rate, along with stepped-up competition from Procter & Gamble Co
Shares of Kimberly-Clark, whose results kick off earnings reports from major U.S. household products makers, fell 1.2 percent to $67.11 in premarket trading on Monday.
Kimberly-Clark is heavily exposed to material costs, with products such as tissues and diapers making up a large chunk of its business. While commodity costs have also risen for rivals such as P&G, their portfolios are more diversified.
The company plans to offset some of the higher costs by cutting more expenses in areas such as sourcing and supply chain. It now expects to save $300 million to $350 million this year, up $50 million from a prior target.
Second-quarter earnings fell to $408 million, or $1.03 per share, from $498 million, or $1.20 per share, a year earlier.
Excluding certain items, earnings per share were $1.18, coming in ahead of the analysts' $1.14 forecast, according to Thomson Reuters I/B/E/S.
Kimberly-Clark, which also makes Kotex feminine care products and Scott paper goods, said sales rose 8.3 percent to $5.26 billion, topping analysts' forecast of $5.13 billion.
Five percentage points of the rise in sales came from changes in foreign currency exchange rates. The volume of goods sold rose just 2 percent, and the company raised prices by 1 percent.
Kimberly-Clark still expects to earn $4.80 to $5.05 per share this year, excluding special items. However, without some moderation in input costs, its profit is more likely to be in the lower half of that range, Falk said.
The company now expects sales to rise 5 percent to 7 percent, up from a prior forecast of 4 percent to 6 percent, aided by strengthening foreign currency exchange rates against the U.S. dollar.
Still, some of the company's international business has felt pressure. Last week, Kimberly Clark de Mexico
(Reporting by Jessica Wohl; Editing by Derek Caney and Lisa Von Ahn)