This is not a good environment for multinational consumer staples companies, such as Kimberly-Clark Corporation (NYSE:KMB), which, like close rival Procter & Gamble, faces currency as a very strong headwind negatively impacting growth. The rising U.S. dollar makes international revenue worth less when outside currencies are converted back into dollars. Declining revenue and earnings made Kimberly-Clark's earnings results last quarter look very weak.

But stripping away currency effects and focusing on the underlying business paints a different picture. Organic results, which exclude foreign exchange, actually look strong. This is why shares of Kimberly-Clark are up 6% over the past year.

Kimberly-Clark holds strong brands like Kleenex and Huggies, which helped the company beat earnings expectations last quarter. Kimberly-Clark reported Q2 results on Thursday.

Emerging markets, cost cuts boost organic results
Kimberly-Clark's revenue fell 6% to $4.6 billion last quarter, year over year. The company swung to a $305 million loss, due to a non-cash pension settlement charge. Adjusted earnings clocked in at $1.41 per share, which represented 6% growth year over year. This beat analyst estimates, which called for $1.36 per share.

On the surface, Kimberly-Clark's results seem to indicate a deteriorating business, but that is not really the case. Kimberly-Clark's organic revenue grew 4%. Unfavorable currency fluctuations shaved a whopping 10 percentage points off the company's revenue last quarter.

Emerging markets are doing very well for the company. Kimberly-Clark realized 10% organic sales growth -- which exclude the impact of changes in foreign currency rates --from the emerging markets.

Across its business, the personal care segment performed the best. This was due to a combination of 3% higher volumes and 1% growth in both selling prices and product mix. Kimberly-Clark's performance in the emerging markets helped lift the company even though sales in North America decreased 2% last quarter, year over year.

The company's earnings were also boosted by cost cuts. Kimberly-Clark realized $105 million in cost savings last quarter in lower general administrative costs, and enjoyed $35 million in lower commodity costs as well.

2015 will be a challenging year
Unfortunately, Kimberly-Clark does not envision the currency headwind easing any time soon. Management expects foreign exchange will have a 9%-10% negative impact on full-year revenue. The good news is that the company's cost cutting and cost input deflation should work out better than planned, so the company increased the bottom end of its earnings guidance.

Thanks in large part to $350 million in general and administrative cost savings and $100 million-$200 million in lower raw materials costs, Kimberly-Clark now expects adjusted earnings per share to fall between $5.65 per share-$5.80 per share.

Cash flow remains solid
Despite the declines in headline revenue and earnings numbers, Kimberly-Clark continues to generate strong cash flow. Last quarter, the company produced $772 million of operating cash flow. It spent $243 million on capital expenditures, resulting in free cash flow of $529 million. With its free cash flow, the company continues to return cash to shareholders.

Kimberly-Clark paid $321 million in dividends and utilized another $100 million to buy back its own stock last quarter. Kimberly-Clark is a legendary dividend stock, as the company has paid dividends for 81 years in a row, and has increased its dividend for 43 consecutive years. This impressive streak of rising dividends places Kimberly-Clark on the Dividend Aristocrats list. At its July 23 closing price, the stock yields 3.1%.

Kimberly-Clark isn't a cheap stock. It changes hands for 19 times the midpoint of its 2015 EPS. But the company holds strong brands, generates a lot of cash flow, and is doing a great job of effectively navigating an extremely tough currency environment.