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Results from Kimberly-Clark Corp. (KMB-N) and Colgate-Palmolive Co (CL-N) on Thursday showed U.S. household goods makers are nimbly going after growth, with their outlooks somewhat positive about the rest of the year despite economic concerns.
Kimberly-Clark, known for its Kleenex tissues and Huggies diapers, is also seeing relief in key commodity expenses as pulp costs should be somewhat lower than it previously expected.
Kimberly-Clark reported quarterly profit that beat expectations and raised its 2012 forecast, while Colgate's earnings were in line with estimates and it held to its earlier forecast.
Both companies are increasing advertising spending to entice consumers with new products, such as Kimberly-Clark's Depend and Poise pads for female incontinence, and Colgate's Colgate Optic White toothpaste.
"I'm encouraged by our execution in a continued volatile environment," said Kimberly-Clark chief executive Thomas Falk.
KIMBERLY-CLARK SEES COMMODITY RELIEF, SHARE BUYBACKS
Kimberly-Clark raised its 2012 outlook. Adjusted earnings per share are forecast at $5.05 US to $5.20, versus a previous target of $5.00 to $5.15.
Colgate's profit and sales topped Wall Street's average estimates, as 13 percent organic sales growth in emerging markets stood out against 2.5 percent growth in developed regions. Organic sales strip out the impact of foreign exchange, acquisitions and divestitures.
Results at larger European rival Unilever NV were helped by strength in emerging markets, though the maker of Lipton tea and Dove soap said it is seeing some commodities costs edge up.
Meanwhile, U.S. candy maker Hershey Co raised its outlook for the year after a strong quarterly showing, helped by price increases.
The results came weeks after Procter & Gamble Co, the world's largest household products maker, cut its forecast and tries to set the right prices in slowing global economies -- issues its smaller competitors have more nimbly managed. P&G is set to report quarterly results on Aug. 3.
Kimberly-Clark and Colgate have both raised prices.
At Kimberly-Clark, the volume of goods sold increased 2 percent, and prices were up more than 2 percent. At Colgate, volume rose 5 percent, and pricing was up 3.5 percent.
Kimberly-Clark now expects key commodity costs will be unchanged to down $100 million this year, versus an earlier expectation that such costs would range from $50 million in deflation to $50 million in inflation.
Pulp costs, costs for non-fiber raw materials and distribution are now projected to be somewhat lower than the company previously expected.
Kimberly-Clark now expects to spend $1.3 billion on share buybacks, subject to market conditions, up from a prior target of $900 million to $1.1 billion, as it expects to have more cash, including proceeds from stock option exercises.
Colgate spent 4 percent more on advertising than a year earlier and plans for an even greater increase in the second half of the year, when it launches new products, CEO Ian Cook said.
Colgate still expects double-digit growth in earnings per share this year on a currency-neutral basis, though at current rates, foreign exchange would cut 2012 earnings per share growth by about 6 percent to 7 percent, Cook said.