Goldman Sachs Cuts Estimates for Kimberly-Clark

Analyst Amy Chasen says the company blamed most of its upcoming earnings shortfall on weak currency translations.

Consumer products maker Kimberly-Clark (KMB ) warned that its second-quarter earnings will be lower than Wall Street expected because of weak currency-exchange rates, higher energy costs and production problems. For the second quarter, Kimberly-Clark sees EPS of $0.81 on a 5% sales rise (including foreign exchange). The company's second quarter EPS forecast is flat with the same quarter a year ago and two pennies less than the consensus estimate. The company, which makes products such as Huggies diapers and Kleenex tissue, also cut its full-year profit target again.

Goldman Sachs cut its estimates for KMB on the news. Analyst Amy Chasen said that after another disappointing quarter, she cut her EPS estimates from $3.48 to $3.40 for this year and from $3.78 to $3.70 for next year. She says management blamed most of the shortfall on currency, as well as volume weakness due to capacity constraints.

However, she believes that the increased competitive environment that has evolved as pulp costs have come down is also contributing to weakness. She expects EPS visibility to remain elusive throughout the first part of next year, and therefore continues to rate the stock as market perform.

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