Kimberly-Clark reported lower profit for the second quarter, while revenue came in below market expectations as allegations regarding the quality of diapers sold in China affected the company’s sales performance.
The maker of Huggies, Kleenex and Pull-Ups posted net income of US$345 million, or US$1.04 per share, compared with US$509 million in the same period last year.
Quarterly revenue increased 0.6% year over year to US$4.19 billion, falling short of the US$4.22 billion forecast by analysts surveyed by FactSet.
According to the company, its second-quarter performance was negatively affected by false claims concerning the quality of certain diaper brands in the Chinese market.
Kimberly-Clark said those allegations significantly reduced diaper sales and are expected to continue weighing on both sales and earnings in the near term.
Chief Executive Officer Mike Hsu said the company is addressing temporary challenges while continuing to invest in innovation and strengthen the value propositions of its brands to regain consumer confidence across all value segments.
In response to the weaker outlook, Kimberly-Clark lowered its full-year organic sales growth forecast to reflect the adverse effects of disruptions caused by activity on Chinese social media. The company also expects adjusted earnings per share to decline by a low single-digit percentage for the year.
