July 15 (Bloomberg) -- Kimberly-Clark Corp., the maker of Huggies diapers and Scott paper towels, may fall in New York trading after saying full-year profit will trail its previous forecast because cost increases will be more than double its prediction.

The cost of oil, natural gas and pulp used in Kleenex tissues, diapers and hospital tubing will increase by as much as $900 million this year, more than twice the Dallas-based company's previous estimate.

Those costs, which will also cause second- and third- quarter profit to fall below last year, may mean that the company will have to increase prices even more than it has indicated to meet its lowest projection, said Ali Dibadj, an analyst at Sanford C. Bernstein & Co. in New York.

``It's very difficult, in fact almost impossible, to get to the low end of their guidance, unless something else fundamental changes in their business,'' Dibadj said in an interview. The company's shares may trade lower today, he said.

Kimberly-Clark dropped $3.80, or 6.5 percent, to $55 at 7:58 p.m. in trading after the New York Stock Exchange closed. Before the announcement, the shares fell 52 cents to $58.80, giving the consumer-products maker a 15 percent decline for the year.

Profit this year excluding some costs will be $4.20 to $4.30 a share, compared with $4.25 in 2007 and less than its forecast of at least $4.45, Kimberly-Clark said yesterday in a statement. Fourteen analysts surveyed by Bloomberg estimated earnings of $4.52.

Offsetting Costs

``Inflation has outpaced our ability to offset higher costs in the near-term through price increases, cost reductions and other measures,'' Thomas Falk, the company's chief executive officer, said in the statement.

Excluding some items, second-quarter earnings fell to $1.03 a share, less than the $1.08 to $1.11 the company forecast previously. Sales climbed 11 percent to $5 billion, Kimberly- Clark said. Complete financial details will be released on July 24.

Third-quarter profit will be 98 cents to $1.03 a share, compared with $1.07 a year earlier and an average analyst estimate of $1.16.

Kimberly-Clark said in May it would raise prices for a second time this year in an effort to counter higher costs.

``Price increases the way they have described it are likely not going to do it,'' Dibadj said.

``The broader problem for them is they're going to have to take pricing, but it doesn't look like they're assuming any real volume declines,'' he said. ``There may be a further risk there.''

To contact the reporter on this story: Kevin Bell in New York at bskillman1@bloomberg.net

Last Updated: July 15, 2008 00:01 EDT