We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Kimberly-Clark's (KMB) K-C Professional Unit Soft, Costs High
Read MoreHide Full Article
Social distancing and stay-at-home trends amid the coronavirus outbreakhave been marring Kimberly-Clark Corporation’s (KMB - Free Report) K-C Professional segment for quite some time. Moreover, escalated cost burden coupled with stiff competition is a concern for the company. Nevertheless, the company is undertaking various cost-saving efforts to counter these hurdles.
Let’s delve deeper.
Factors Hurting Kimberly-Clark’s Performance
Kimberly-Clark’s K-C Professional segment sales have been declining year over year for a while now, due to hurdles related to coronavirus. In the first quarter of 2021, segment sales fell 11% to $752 million. Volumes were down 21% due to reduced away-from-home demand and tough business conditions. Sales fell 8% in North America and 18% in developing and emerging markets across the segment. The metric dropped 14% in developed markets outside North America. Further, operating profit in the segment came in at $126 million, down 30%. The downside was caused by reduced volumes as well as escalated input and other manufacturing costs.
Image Source: Zacks Investment Research
We note that the company has been encountering high input costs and escalated other manufacturing expenses, including coronavirus-related costs, for the past few quarters. In the first quarter, total adjusted operating profit came in at $804 million, down from $997 million in the year-ago quarter, thanks to rise in input costs (to the tune of $135 million) as well as reduced sales volumes. Higher pulp, other materials and distribution costs led to rise in input costs. 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. For 2021, management expects commodity inflation in the range of $900-$1,050 million. The projection is likely to be driven by polymer-based materials and pulp.
Incidentally, this Zacks Rank #4 (Sell) company reported dismal first-quarter 2021 results, with the top and the bottom line declining year over year and missing the Zacks Consensus Estimate. Unfavorable year-over-year comparisons owing to pandemic-led stock piling during the prior-year quarter, declines in consumer tissue category as well as commodity inflation affected the quarterly results. Also, some temporary supply chain disruptions were deterrents.
Wrapping Up
Kimberly-Clark has been taking efficient steps to lower costs. This is highlighted by the 2018 Global Restructuring Program as well as the Focus on Reducing Costs Everywhere or FORCE Program. During the first quarter, the company generated cost savings of $65 million and $40 million from the FORCE Program and the 2018 Global Restructuring Program, respectively. Moreover, the company is committed toward its three key strategic growth pillar — improving its core business in the developed markets; accelerating growth of Personal Care segment in developing and emerging markets as well as enhancing digital and e-commerce capacities
That being said, let’s see if these upsides can help the company counter the aforementioned hurdles. Shares of Kimberly-Clark have lost 4.1% so far this year against the industry’s growth of 3.9%.
Darling Ingredients Inc. (DAR - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 29.8%, on average.
Nomad Foods Limited (NOMD - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 10.3%, on average.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today. See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Kimberly-Clark's (KMB) K-C Professional Unit Soft, Costs High
Social distancing and stay-at-home trends amid the coronavirus outbreakhave been marring Kimberly-Clark Corporation’s (KMB - Free Report) K-C Professional segment for quite some time. Moreover, escalated cost burden coupled with stiff competition is a concern for the company. Nevertheless, the company is undertaking various cost-saving efforts to counter these hurdles.
Let’s delve deeper.
Factors Hurting Kimberly-Clark’s Performance
Kimberly-Clark’s K-C Professional segment sales have been declining year over year for a while now, due to hurdles related to coronavirus. In the first quarter of 2021, segment sales fell 11% to $752 million. Volumes were down 21% due to reduced away-from-home demand and tough business conditions. Sales fell 8% in North America and 18% in developing and emerging markets across the segment. The metric dropped 14% in developed markets outside North America. Further, operating profit in the segment came in at $126 million, down 30%. The downside was caused by reduced volumes as well as escalated input and other manufacturing costs.
We note that the company has been encountering high input costs and escalated other manufacturing expenses, including coronavirus-related costs, for the past few quarters. In the first quarter, total adjusted operating profit came in at $804 million, down from $997 million in the year-ago quarter, thanks to rise in input costs (to the tune of $135 million) as well as reduced sales volumes. Higher pulp, other materials and distribution costs led to rise in input costs. 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. For 2021, management expects commodity inflation in the range of $900-$1,050 million. The projection is likely to be driven by polymer-based materials and pulp.
Incidentally, this Zacks Rank #4 (Sell) company reported dismal first-quarter 2021 results, with the top and the bottom line declining year over year and missing the Zacks Consensus Estimate. Unfavorable year-over-year comparisons owing to pandemic-led stock piling during the prior-year quarter, declines in consumer tissue category as well as commodity inflation affected the quarterly results. Also, some temporary supply chain disruptions were deterrents.
Wrapping Up
Kimberly-Clark has been taking efficient steps to lower costs. This is highlighted by the 2018 Global Restructuring Program as well as the Focus on Reducing Costs Everywhere or FORCE Program. During the first quarter, the company generated cost savings of $65 million and $40 million from the FORCE Program and the 2018 Global Restructuring Program, respectively. Moreover, the company is committed toward its three key strategic growth pillar — improving its core business in the developed markets; accelerating growth of Personal Care segment in developing and emerging markets as well as enhancing digital and e-commerce capacities
That being said, let’s see if these upsides can help the company counter the aforementioned hurdles. Shares of Kimberly-Clark have lost 4.1% so far this year against the industry’s growth of 3.9%.
Better-Ranked Staple Bets
Medifast, Inc. (MED - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 12.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Darling Ingredients Inc. (DAR - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 29.8%, on average.
Nomad Foods Limited (NOMD - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 10.3%, on average.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>