Kimberly Clark (NYSE:KMB) has had a rough run lately. Organic sales growth was just 1% or less in each of the last two years and profitability worsened in both 2017 and 2018.

The consumer products giant ended last year on a positive note, though, and that success has encouraged investors to believe improvements are on the way that could close the operating gap with rivals like Procter & Gamble (NYSE:PG). Both companies report earnings in the next week, with Kimberly Clark set to announce its first-quarter 2019 results on Monday, Apr. 22.

A mother shops with a toddler.

Image source: Getty Images.

Market share trends

Kimberly Clark's 1% organic sales gain last year met management's forecast but was still disappointing for some investors. Rival P&G, after all, had seen its growth speed up to 4% as the owner of the Pampers diaper franchise ended its market share slide. Kimberly Clark's results show that its growth struggles haven't been addressed yet. They also highlight the fact that P&G has a more diverse geographical footprint, while Kimberly Clark gets a larger portion of earnings from the sluggish U.S. industry.

Those challenges laid the foundation for a weak outlook for the year ahead. While P&G is predicting steady growth acceleration, Kimberly Clark CEO Mike Hsu said in late January that "It's appropriate not to plan for much improvement right now." Specifically, the company is planning for growth to tick up to a 2% rate in 2019, which would likely trail its rival and fall well short of the 5% spikes investors saw as recently as 2015.

Pricing and volumes

Results could be unusually volatile over the next few quarters, because Kimberly Clark is raising prices across its portfolio. Management would prefer to delay those increases until sales gains speed back up, but that's not an attractive option today.

Cost spikes on inputs like paper and plastic removed $800 million from earnings last year, or twice what executives had initially predicted. With commodity prices continuing to rise and cost cuts only partially offsetting these hikes, Hsu and his team are bracing for a tough year balancing sales growth goals against profitability targets.

Investors can judge the success of this tightrope walk by following sales volumes, prices, and operating margin. The company aims for organic growth that's about evenly split between higher volumes and price raises. If gains come entirely from price increases, as they did for much of last year, Kimberly Clark's growth rate will be harder to maintain.

Industry updates

The last few months of operating results will have given management a clearer picture of the industry and whether Kimberly Clark can meet its modest growth goals. As of late January, executives predicted a 2% sales uptick that came only from rising prices as volumes drift lower. Procter & Gamble is predicting a sharper acceleration closer to 4%.

Looking further out, the consumer staples specialist saw the industry rising just 1% to 3% annually through 2022, with demand challenges impacting the U.S. as well as key international markets like China and Latin America. Investors will hear on Monday whether Hsu and his team still see those issues holding earnings growth down to about 4% in 2019, before profits begin rebounding in the years that follow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.