To: locogringo who wrote (923830 ) 3/1/2016 10:03:49 AM From: FJB 2 RecommendationsRecommended By
Respond to Obonzonomics Catastrophic Failure in Venezuela - Country Disintegrating blogs.barrons.com Adios Venezuela: Kimberly-Clark Joins Pepsi & Mondelez Exits Kimberly-Clark ( KMB ) is deconsolidating its operations in Venezuela, which is accounting code for multinationals all but exiting the oil-producing country where staggering inflation and political tension rule the day. A supermarket line in Caracas on Feb. 12. Agence France-Presse/Getty Images Venezuelan government made a debt payment last week . In addition, the government recently announced tweaks to its currrency and fuel subsidy policies . And it settled a dispute with Canadian mining company Gold Reserve ( GDRZF ) by launching a $5 billion joint venture, resolving Venezuela’s expropriation of Gold Reserve assets in 2008. But other related cases remain, including one with ExxonMobil ( XOM ).Gol Linhas Aereas Inteligentes ( GOL ) reported cash stuck in Venezuela . In addition, PepsiCo ( PEP ) and Mondelez International ( MDLZ ) recently took accounting steps to isolate their Venezuela operations.Wendy Nicholson and Samantha Berger note that Kimberly-Clark’s operations in Venezuela were not significant, at roughly 3% of 2014 net sales. They add:“KMB noted that effective December 31, 2015, KMB deconsolidated the assets and liabilities of its business in Venezuela from its consolidated balance sheet, moving to the cost method of accounting for its operations in the country. This “reflects the continued deterioration of conditions in the country, including a slowdown in the availability of foreign exchange, and resulted in an after tax charge of $102 [million] in the fourth quarter of 2015.” Therefore, starting in the first quarter of 2016, KMB will not include the results of its Venezuelan business in its consolidated financial statements.” As a whole, Kimberly-Clark, whose brands include Kleenex, Scott, Huggies and Kotex, generated $2.3 billion in operating cash flow in 2015, 19% less than in 2014. The company expects to complete a restructuring plan this year that it started in October 2014, with cumulative pre-tax savings of $120-$140 million by the end of 2017. Citi’s analysts think the stock has limited upside from its recent price of $131.64.“Given our 2017 EPS estimate of $6.65 (+8% year over year), the ~14.5x market multiple on the Street’s estimate of the S&P 500's 2017 EPS, and our belief that KMB should trade at a 40% premium, we derive our $135 target price.” See Mondelez Downgraded: Venezuela Pain, Oreos In Brazil & Russia? , What Pepsi Said About Venezuela & Emerging Markets and all the Barron’s Emerging Markets Daily posts on Venezuela’s debt
