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Kimberly-Clark (KMB) Faces High Costs, Down Over 10% in 3 Months
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Kimberly-Clark Corporation (KMB - Free Report) has been grappling with escalated input costs for a while now. Cost inflation is exerting pressure on the company’s profits. The consumer products company has been witnessing softness in the Consumer Tissue segment for the past few quarters. Thanks to such downsides, shares of the Zacks Rank #4 (Sell) company have lost 12.9% in the past three months compared with the industry’s 9.1% decline.
Let’s delve deeper.
Image Source: Zacks Investment Research
Cost Hurdles Denting Profits
Kimberly-Clark is battling high input costs for the past few quarters. The trend persisted in the fourth quarter of 2021, with the adjusted operating profit amounting to $611 million and falling from $767 million in the year-ago quarter. The downside was caused by a rise in input costs to the tune of $530 million. An increase in pulp and polymer-based materials, distribution and energy costs led to a rise in input costs. Adjusted earnings came in at $1.30 per share, down 23% from $1.69 per share in the year-ago quarter.
Management highlighted that it expects to keep witnessing a tough operating environment, with escalated input cost inflation, supply chain disruption along with pandemic-induced uncertainty in 2022. For the year, Kimberly-Clark expects operating profit to be down low to mid-single digits percent compared with 2021 adjusted operating profit. Key input costs are estimated to increase $750-$900 million. Management expects costs to rise or remain escalated for most inputs like purchased raw materials as well as distribution and energy. The company envisions 2022 earnings per share of $5.60-$6.00, indicating a 6% year-over-year decline at the mid-point of the range.
Consumer Tissue Unit Weak
Kimberly-Clark’s Consumer Tissue segment has been witnessing soft sales in the past few quarters. Segment sales of $1,559 million fell 10% year over year in the fourth quarter of 2021. Volumes fell 7% due to a tough comparison stemming from escalated shipments in North America in the year-ago quarter owing to a spike in demand amid the pandemic. Net selling prices inched down almost 1%. Sales fell 14% in North America. The metric fell 6% in developed markets outside North America.
Wrapping Up
Kimberly-Clark has been taking robust steps to lower costs amid an inflationary environment. In this regard, the company is aggressively cutting costs and enhancing supply-chain productivity through its Focus on Reducing Costs Everywhere or FORCE Program. Kimberly-Clark is committed to its three key strategic growth pillars, which include focusing on improving its core business in the developed markets, speeding up growth in the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities.
That being said, let’s see if these upsides can help Kimberly-Clark counter the aforementioned hurdles.
Nu Skin, which develops and distributes personal care and wellness products worldwide, currently sports a Zacks Rank #1 (Strong Buy). Shares of NUS have declined 9% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nu Skin’s current financial year sales and earnings per share (EPS) suggests growth of 0.9% and 4.1%, respectively, from the year-ago reported figure. NUS has a trailing four-quarter earnings surprise of 16.1%, on average.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen, and value-added chicken and pork products, sports a Zacks Rank #1. Shares of Pilgrim’s Pride have declined 10.9% in the past three months.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial year EPS suggests growth of 19.7% from the year-ago reported number. PPC has a trailing four-quarter earnings surprise of 24.9%, on average.
Flowers Foods, the producer and marketer of packaged bakery products, currently carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have decreased 7.3% in the past three months.
The Zacks Consensus Estimate for Flowers Foods’ current financial year sales and EPS suggests growth of 7.2% and 4%, respectively, from the year-ago reported figure. FLO has a trailing four-quarter earnings surprise of 9%, on average.
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Kimberly-Clark (KMB) Faces High Costs, Down Over 10% in 3 Months
Kimberly-Clark Corporation (KMB - Free Report) has been grappling with escalated input costs for a while now. Cost inflation is exerting pressure on the company’s profits. The consumer products company has been witnessing softness in the Consumer Tissue segment for the past few quarters. Thanks to such downsides, shares of the Zacks Rank #4 (Sell) company have lost 12.9% in the past three months compared with the industry’s 9.1% decline.
Let’s delve deeper.
Image Source: Zacks Investment Research
Cost Hurdles Denting Profits
Kimberly-Clark is battling high input costs for the past few quarters. The trend persisted in the fourth quarter of 2021, with the adjusted operating profit amounting to $611 million and falling from $767 million in the year-ago quarter. The downside was caused by a rise in input costs to the tune of $530 million. An increase in pulp and polymer-based materials, distribution and energy costs led to a rise in input costs. Adjusted earnings came in at $1.30 per share, down 23% from $1.69 per share in the year-ago quarter.
Management highlighted that it expects to keep witnessing a tough operating environment, with escalated input cost inflation, supply chain disruption along with pandemic-induced uncertainty in 2022. For the year, Kimberly-Clark expects operating profit to be down low to mid-single digits percent compared with 2021 adjusted operating profit. Key input costs are estimated to increase $750-$900 million. Management expects costs to rise or remain escalated for most inputs like purchased raw materials as well as distribution and energy. The company envisions 2022 earnings per share of $5.60-$6.00, indicating a 6% year-over-year decline at the mid-point of the range.
Consumer Tissue Unit Weak
Kimberly-Clark’s Consumer Tissue segment has been witnessing soft sales in the past few quarters. Segment sales of $1,559 million fell 10% year over year in the fourth quarter of 2021. Volumes fell 7% due to a tough comparison stemming from escalated shipments in North America in the year-ago quarter owing to a spike in demand amid the pandemic. Net selling prices inched down almost 1%. Sales fell 14% in North America. The metric fell 6% in developed markets outside North America.
Wrapping Up
Kimberly-Clark has been taking robust steps to lower costs amid an inflationary environment. In this regard, the company is aggressively cutting costs and enhancing supply-chain productivity through its Focus on Reducing Costs Everywhere or FORCE Program. Kimberly-Clark is committed to its three key strategic growth pillars, which include focusing on improving its core business in the developed markets, speeding up growth in the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities.
That being said, let’s see if these upsides can help Kimberly-Clark counter the aforementioned hurdles.
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Some better-ranked stocks are Nu Skin Enterprises (NUS - Free Report) , Pilgrim’s Pride (PPC - Free Report) and Flowers Foods (FLO - Free Report) .
Nu Skin, which develops and distributes personal care and wellness products worldwide, currently sports a Zacks Rank #1 (Strong Buy). Shares of NUS have declined 9% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nu Skin’s current financial year sales and earnings per share (EPS) suggests growth of 0.9% and 4.1%, respectively, from the year-ago reported figure. NUS has a trailing four-quarter earnings surprise of 16.1%, on average.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen, and value-added chicken and pork products, sports a Zacks Rank #1. Shares of Pilgrim’s Pride have declined 10.9% in the past three months.
The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial year EPS suggests growth of 19.7% from the year-ago reported number. PPC has a trailing four-quarter earnings surprise of 24.9%, on average.
Flowers Foods, the producer and marketer of packaged bakery products, currently carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have decreased 7.3% in the past three months.
The Zacks Consensus Estimate for Flowers Foods’ current financial year sales and EPS suggests growth of 7.2% and 4%, respectively, from the year-ago reported figure. FLO has a trailing four-quarter earnings surprise of 9%, on average.