Kimberly-Clark Corp posted a quarterly profit that beat Wall Street expectations due to cost cuts and lower expenses, but trimmed its full-year sales outlook and warned of higher-than-expected costs for materials like pulp.

The company, known for Kleenex tissues and Huggies diapers, stood by its profit outlook for the year and said it remains on track with its full-year plan despite the tough economic climate. Its shares were up 0.5 percent in early trading.

Kimberly-Clark still expects marketing spending in 2010 to rise at a faster pace than sales, but see organic sales -- which exclude currency fluctuations and acquisitions -- picking up in the second half. Household products makers are ramping up marketing spending as they battle for shoppers' attention.

They beat consensus, but a lot of that came from below the operating line, said Edward Jones analyst Jack Russo, who has a buy rating on the stock.

The tax rate was lower and nonoperating items helped out, he added. They did lower sales guidance. They're in some tough categories.

Russo called it a mixed quarter and said the company will struggle with comparisons to last year, when it benefited from strong sales of items related to the H1N1 flu.

What you saw in the second quarter is what you're going to see the rest of the year, he said.

Net income in the second quarter rose almost 24 percent to $498 million, or $1.20 a share, compared with $403 million, or 97 cents a share, in the year-earlier period. Analysts polled by Thomson Reuters I/B/E/S had expected $1.13 a share.

Sales rose 2.8 percent to $4.86 billion, but that was below the $4.95 billion analysts had expected. Organic sales rose 2 percent due to higher prices and strong demand overseas.

Kimberly-Clark, which competes against powerhouse Procter & Gamble Co in such categories as diapers, tissues and tampons, still expects full-year earnings per share to likely come in toward the low end of its forecast of $4.80 to $5.00.

However, the company cut its sales outlook, saying it now expects 2010 sales to rise 3 percent to 5 percent, instead of 4 percent to 6 percent.

Analysts were expecting a full-year profit of $4.78 per share on sales of $19.8 billion.

Kimberly-Clark also cut the low end of its expected organic sales growth rate for the year by a percentage point, saying it now expects growth of 2 percent to 4 percent. It cuts its expected volume growth rate by one percentage point, to a range of 1 percent to 2 percent.

The company increased its target for share repurchases this year by $200 million, to a range of $700 million to $800 million.

Kimberly-Clark said full-year material costs will be higher than initially expected due to increased costs for items like virgin pulp and polymer resin. But it also expects pulp costs will start to fall from quarter to quarter in the second half.

It raised its target for cost savings to at least $300 million from a prior forecast of $200 million to $250 million. It said full-year spending will be at the low end or possibly below its targeted range of $1 billion to $1.1 billion.

The company's shares were up 31 cents to $63.27 in early trading on the New York Stock Exchange.

(Reporting by Ben Klayman, editing by Gerald E. McCormick and John Wallace)