US - Kimberly Clark, maker of Kleenex and Huggies, is increasing the pension contribution into its $3bn defined benefit plan by up to $260m because of its decreased funded status.
The payment was meant to go out in 2012, but officials at the firm have decided to move the contribution up to 2011, and will reduce a share repurchase programme by the same amount. The firm's target for pension contributions is now $680-$760m, up from $420-$500m.
"This will improve our pension-funded status nicely from current levels, and it will allow us to make much more modest contributions next year, while setting us up for a strong year of share repurchases in 2012," said chief financial officer Mark Buthman in an earnings call.
At the end of 2010, the company had liabilities totalling $1.1bn though a third quarter figure could not immediately be learned.
Kimberly Clark has already contributed $400m through the third quarter.
Kimberly Clark spokesperson Bob Brand said: "The decision to make the additional pension contributions in 2011 is primarily due to a lower discount rate on our pension plan which has thereby reduced our funded status below expectations."
Additionally, share repurchases are expected to total $1.24bn against previous targets of $1.5bn.
However, net sales for the firm hit an all time record of $5.4bn, an increase of 8%. Diluted net income per share for the quarter was $1.09 compared with $1.14 a year ago while third quarter adjusted earnings per share were $1.26 in 2011 while adjusted earnings per share in the third quarter increased 11% compared to diluted net income per share in the prior year
Kimberly Clark senior vice president and chief financial officer Mark Buthman said: "The improvement was driven by higher operating profit, along with a lower share count and a lower effective tax rate. Given our year-to-date adjusted tax rate of 30.1%, we now expect the full year rate to be toward the low end of our target for the year of 30% to 32%.
"Cash provided by operations increased slightly to $750 million in the third quarter. I'm encouraged by our cash generation and expect a strong finish to the year."
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