Fitch Ratings said it has a stable outlook for the U.S. consumer products industry in 2012, though growth in emerging markets will slow, as more developed economies also see declines.
The ratings firm expects price-led 3.5% revenue growth for next year, down from 5% in 2011. While gross margins should improve slightly, the firm said there is likely to be a moderate squeeze on operation margins and free cash flow.
"Emerging markets are critical for this industry given their strong demand for industry products and positive GDP growth," said Fitch Director Grace Barnett. "Yet growth in the emerging markets is slowing and will not be enough to offset declines in the sizeable revenues and profits generated from Europe and North America."
Fitch said the ratings on Kimberly-Clark Corp. (KMB), Clorox Co. (CLX) and Newell Rubbermaid Inc. (NWL) could be pressured if pulp, resin and energy costs increase significantly. High costs for resins and pulp weighed on the sector for much of 2011, but have been stabilizing of late. However, Fitch noted that lower commodity costs and a slow growth environment ripen the conditions for another fiercely promotional environment.
-By Nathalie Tadena, Dow Jones Newswires; 212-416-3287; email@example.com;