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Kimberly-Clark (KMB) Q1 Earnings Miss Estimates, Decline Y/Y
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Kimberly-Clark Corporation (KMB - Free Report) reported dismal first-quarter 2021 results, with the top and the bottom line missing the Zacks Consensus Estimate as well as declining year over year. Unfavorable year over year comparisons owing to pandemic-led stock piling during the year-ago period, declines in consumer tissue category as well as commodity inflation affected the quarterly results. Also, some temporary supply chain disruptions were deterrents. Nevertheless, savings from restructuring plans offered some respite. Management intends to remain committed to its K-C Strategy 2022 and anticipates strengthening its market position. Also, the company updated its 2021 outlook.
Quarter in Detail
Adjusted earnings came in at $1.80 per share, which missed the Zacks Consensus Estimate of $1.90. Moreover, the bottom line declined from $2.13 per share in the year-ago quarter.
KimberlyClark Corporation Price, Consensus and EPS Surprise
Kimberly-Clark’s sales came in at $4,743 million, which missed the Zacks Consensus Estimate of $4,941.2 and declined 5% year over year. Favorable currency movements lifted sales slightly, while the Softex Indonesia buyout boosted the metric by 2%. Organic sales fell 8% year over year. Volumes fell 10%, while the metric increased more than 8% in the year-ago quarter. Net selling prices and product mix both inched up 1% each.
First-quarter volumes are compared against increased shipments owing to stock-piling amid the coronavirus outbreak during the year-ago quarter. During 2021, volumes in North American consumer products were adversely affected due to supply chain disruptions thanks to severe weather conditions in the southern part of the United States through February.
In North America, organic sales in consumer products fell 10%, while it declined 8% in the K-C Professional segment. Internationally, organic sales fell 14% across developed markets and 1% in developing and emerging (D&E) markets.
Adjusted operating profit came in at $804 million, down from $997 million in the year-ago quarter, thanks to a rise in input costs (to the tune of $135 million) as well as reduced sales volumes. Increased pulp, other materials and distribution costs led to rise in input costs. Also, rise in other manufacturing costs like costs related to COVID-19 and inefficiencies from lower production volumes coupled with unfavorable foreign currency rates caused the downside. Nevertheless, these were somewhat offset by increased net selling prices and cost savings of $65 million and $40 million from the FORCE (Focused On Reducing Costs Everywhere) program and the 2018 Global Restructuring Program, respectively.
Segment Details
Personal Care: Sales of $2,462 million increased 2% year over year. Volumes fell nearly 3%, while product mix inched up 1%. Further, the Softex Indonesia buyout aided sales by 4%. However, unfavorable currency rates hurt sales by nearly 1%. Sales declined 7% in North America. Sales in D&E markets rose 12%. The metric rose 5% across developed markets outside North America.
Consumer Tissue: Segment sales of $1,510 million fell 12% year over year including nearly 1% positive impact from currency rates. Volumes fell nearly 14% reflecting comparison with higher shipments during the last-year’s quarter. Also, softness in the category during 2021 led to decline in volumes. Sales fell 14% in North America and 11% in D&E markets. The metric declined 10% in developed markets outside North America.
K-C Professional (KCP): Segment sales fell 11% to $752 million. Volumes were down 21% due to reduced away-from-home demand and tough business conditions. Net selling prices and product mix rose 7% and 2%, respectively. Also, favorable currency rates contributed 1% to sales. Sales fell 8% in North America and 18% in D&E markets. The metric dropped 14% in developed markets outside North America.
Other Financial Updates
The company ended the quarter with cash and cash equivalents of $320 million, long-term debt of $7,548 million and stockholders’ equity of $746 million. Further, Kimberly-Clark generated cash from operating activities of $321 million during the quarter under review. Management incurred capital expenditures of $298 million. Kimberly-Clark repurchased 1.3 million shares for $175 million in the first quarter.
The company is on track with the 2018 Global Restructuring Program, which is focused on lowering its structural costs and improving financial flexibility. As part of this initiative, the company plans to sell or exit some low-margin businesses that deliver about 1% of net sales. Notably, Kimberly-Clark generated cumulative savings of $465 million from this program, until the first quarter of 2021. Management anticipates annual pre-tax cost savings of $540-$560 million from this program by 2021-end.
2021 Outlook
Net sales in 2021 are now expected to grow 3-5% year over year. Earlier, management had anticipated the metric to increase 4-6%. Organic sales are now likely to remain flat to up 1% in 2021. Prior to this, the company had guided for an increase of 1-2% of organic sales.
Further, management now expects adjusted operating profit to decline in the range of 3-6%. Earlier, the metric was anticipated to range from flat to a 2% increase. Finally, the company now envisions 2021 adjusted earnings per share of $7.30-$7.55, down from the previous outlook of $7.75-$8. Notably, the metric came in at $7.74 in 2020. The company’s updated 2021 earnings guidance reflects increased input cost inflation and reduced sales volumes, somewhat offset by increase in net selling prices and greater cost savings.
Shares of this Zacks Rank #3 (Hold) company have gained 2.8% in the past three months compared with the industry’s growth of 0.1%.
The J. M. Smucker Company (SJM - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 1.7%.
United Natural Foods, Inc. (UNFI - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Kimberly-Clark (KMB) Q1 Earnings Miss Estimates, Decline Y/Y
Kimberly-Clark Corporation (KMB - Free Report) reported dismal first-quarter 2021 results, with the top and the bottom line missing the Zacks Consensus Estimate as well as declining year over year. Unfavorable year over year comparisons owing to pandemic-led stock piling during the year-ago period, declines in consumer tissue category as well as commodity inflation affected the quarterly results. Also, some temporary supply chain disruptions were deterrents. Nevertheless, savings from restructuring plans offered some respite. Management intends to remain committed to its K-C Strategy 2022 and anticipates strengthening its market position. Also, the company updated its 2021 outlook.
Quarter in Detail
Adjusted earnings came in at $1.80 per share, which missed the Zacks Consensus Estimate of $1.90. Moreover, the bottom line declined from $2.13 per share in the year-ago quarter.
KimberlyClark Corporation Price, Consensus and EPS Surprise
KimberlyClark Corporation price-consensus-eps-surprise-chart | KimberlyClark Corporation Quote
Kimberly-Clark’s sales came in at $4,743 million, which missed the Zacks Consensus Estimate of $4,941.2 and declined 5% year over year. Favorable currency movements lifted sales slightly, while the Softex Indonesia buyout boosted the metric by 2%. Organic sales fell 8% year over year. Volumes fell 10%, while the metric increased more than 8% in the year-ago quarter. Net selling prices and product mix both inched up 1% each.
First-quarter volumes are compared against increased shipments owing to stock-piling amid the coronavirus outbreak during the year-ago quarter. During 2021, volumes in North American consumer products were adversely affected due to supply chain disruptions thanks to severe weather conditions in the southern part of the United States through February.
In North America, organic sales in consumer products fell 10%, while it declined 8% in the K-C Professional segment. Internationally, organic sales fell 14% across developed markets and 1% in developing and emerging (D&E) markets.
Adjusted operating profit came in at $804 million, down from $997 million in the year-ago quarter, thanks to a rise in input costs (to the tune of $135 million) as well as reduced sales volumes. Increased pulp, other materials and distribution costs led to rise in input costs. Also, rise in other manufacturing costs like costs related to COVID-19 and inefficiencies from lower production volumes coupled with unfavorable foreign currency rates caused the downside. Nevertheless, these were somewhat offset by increased net selling prices and cost savings of $65 million and $40 million from the FORCE (Focused On Reducing Costs Everywhere) program and the 2018 Global Restructuring Program, respectively.
Segment Details
Personal Care: Sales of $2,462 million increased 2% year over year. Volumes fell nearly 3%, while product mix inched up 1%. Further, the Softex Indonesia buyout aided sales by 4%. However, unfavorable currency rates hurt sales by nearly 1%. Sales declined 7% in North America. Sales in D&E markets rose 12%. The metric rose 5% across developed markets outside North America.
Consumer Tissue: Segment sales of $1,510 million fell 12% year over year including nearly 1% positive impact from currency rates. Volumes fell nearly 14% reflecting comparison with higher shipments during the last-year’s quarter. Also, softness in the category during 2021 led to decline in volumes. Sales fell 14% in North America and 11% in D&E markets. The metric declined 10% in developed markets outside North America.
K-C Professional (KCP): Segment sales fell 11% to $752 million. Volumes were down 21% due to reduced away-from-home demand and tough business conditions. Net selling prices and product mix rose 7% and 2%, respectively. Also, favorable currency rates contributed 1% to sales. Sales fell 8% in North America and 18% in D&E markets. The metric dropped 14% in developed markets outside North America.
Other Financial Updates
The company ended the quarter with cash and cash equivalents of $320 million, long-term debt of $7,548 million and stockholders’ equity of $746 million. Further, Kimberly-Clark generated cash from operating activities of $321 million during the quarter under review. Management incurred capital expenditures of $298 million. Kimberly-Clark repurchased 1.3 million shares for $175 million in the first quarter.
The company is on track with the 2018 Global Restructuring Program, which is focused on lowering its structural costs and improving financial flexibility. As part of this initiative, the company plans to sell or exit some low-margin businesses that deliver about 1% of net sales. Notably, Kimberly-Clark generated cumulative savings of $465 million from this program, until the first quarter of 2021. Management anticipates annual pre-tax cost savings of $540-$560 million from this program by 2021-end.
2021 Outlook
Net sales in 2021 are now expected to grow 3-5% year over year. Earlier, management had anticipated the metric to increase 4-6%. Organic sales are now likely to remain flat to up 1% in 2021. Prior to this, the company had guided for an increase of 1-2% of organic sales.
Further, management now expects adjusted operating profit to decline in the range of 3-6%. Earlier, the metric was anticipated to range from flat to a 2% increase. Finally, the company now envisions 2021 adjusted earnings per share of $7.30-$7.55, down from the previous outlook of $7.75-$8. Notably, the metric came in at $7.74 in 2020. The company’s updated 2021 earnings guidance reflects increased input cost inflation and reduced sales volumes, somewhat offset by increase in net selling prices and greater cost savings.
Shares of this Zacks Rank #3 (Hold) company have gained 2.8% in the past three months compared with the industry’s growth of 0.1%.
Some Solid Staple Bets
Sanderson Farms, Inc. , currently sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 43.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The J. M. Smucker Company (SJM - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 1.7%.
United Natural Foods, Inc. (UNFI - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>