Cost Cutting Pays Dividends For Consumer Products Giant

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Like many other large-cap firms, consumer products giantKimberly-Clark ( KMB ) has been in cost-cutting mode in recent quarters, getting leaner and meaner to pump up the bottom line. The results are paying off.

Improving fundamentals and news of a dividend increase Tuesday have the stock trading near all-time highs. The company lifted its quarterly dividend nearly 4% to 84 cents a share, giving it a current yield of 3.1%.

The dividend is payable April 2 to shareholders of record March 7.

In late January, the company reported quarterly profit of $1.44 a share, up 5% from a year ago. Sales were flat at just over $5.3 billion, but organic sales (from existing operations) rose 5% and international sales increased 11%. Management's efficiency is reflected in the high annual return on equity of 45.4%.

In 2012, Kimberly-Clark announced plans to restructure its European business. It exited the diaper business in most of Western and Central Europe. It also divested or exited lower-margin businesses in certain European markets, mostly in the consumer tissue market. Both moves crimped overall sales in the fourth quarter, but emerging markets remain strong. Volumes increased in China, Russia and Vietnam and most of Latin America, including Brazil and Venezuela.

Kimberly-Clark's products include Huggies diapers, Scott paper towels and Kleenex tissues.

In November, the company announced plans to spin off its health care business, which focuses on surgical and infection prevention products and medical devices. In 2013, the business contributed $1.62 billion in sales, or nearly 8% of total sales. Kimberly-Clark plans to complete the spinoff by the third quarter.

Kimberly-Clark's current base-on-base pattern, which started in April, shows a buy point of 110.52, or 10 cents above its Jan. 24 intraday high.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: KMB

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