Jan 25, 2006. /Lesprom Network/. Kimberly-Clark Corp. said fourth-quarter net income fell 17%, weighed down by costs tied to its restructuring program and inflationary pressures from energy and raw materials. The Irving, Texas, maker of Huggies diapers and Kleenex tissue said it expects cost pressures to continue, crimping profits in the early part of 2006 before announced price increases and cost reductions can take their full effect. In the quarter ended Dec. 31, net income fell to $371.1 million, or 79 cents a share, from $445.3 million, or 91 cents a share. Excluding restructuring costs, the effect of an accounting change and tax expenses related to earnings repatriation, the company earned $445.3 million, or 95 cents a share, which matched analysts' estimates provided by Thomson First Call. In the latest quarter, Kimberly-Clark absorbed about $110 million in cost inflation, mostly for oil-based materials used in plastic and absorbent products and higher energy and distribution costs. Overall in 2005, the company saw its costs inflate by more than $400 million, more than double the level expected heading into the year, it said. Sales rose 2.8% to $4.0 billion from $3.9 billion a year ago, helped by a 2% increase in sales volume and a 1% improvement in net selling prices and product mix. The effect of foreign currency exchange, however, turned negative in the quarter, reducing sales by about 1%. Sales remained strong in developing and emerging markets. The company's Kleenex facial tissue and Scott bathroom tissue helped generate a 10% increase in sales of consumer tissue products in North America. In Europe, consumer tissue sales fell 7%. Declines in North American sales of Kotex feminine care products offset improvements in Huggies baby wipes, child care and incontinence care brands. European diaper volumes were down 4% overall, but Kimberly-Clark said Huggies sales volumes rose 4% in four core European markets. The company said its top line should continue to benefit from new products and growth in developing and emerging markets, growing 3% to 5% in 2006. "Volume gains are expected to drive this performance with modestly higher prices mostly offset by foreign currency effects," Kimberly-Clark said in its earnings release. Continued cost savings will also be key to earnings growth. Kimberly-Clark said it's targeting $80 million to $100 million of savings from initiatives announced in July, on top of at least $150 million in cost savings from its ongoing restructuring program. The newest initiatives generated about $7 million in cost savings in the fourth quarter and $10 million for the year, in line with the company's forecast for $5 million to $10 million last year. Kimberly-Clark has notified employees of workforce reductions and other actions at 13 of about 24 facilities slated for sale, closure or streamlining, as part of the initiatives. Pre-tax charges totaling $61 million, or about 9 cents a share after taxes, were recorded in the fourth quarter as a result of cost-reduction initiatives. All in all, the company expects 3%-to-5% revenue growth in 2006 and earnings of $3.85 to $3.95 a share, before unusual items. First-quarter earnings per share is expected to range from 90 to 93 cents, before unusual items but taking stock-option expense into account.