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Kimberly-Clark (KMB) Q4 Earnings Top Estimates, Dividend Raised

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Kimberly-Clark Corporation (KMB - Free Report) reported fourth-quarter 2022 results, wherein the bottom line beat the Zacks Consensus Estimate and increased year over year. The company is benefiting from its growth strategy, including investments in solid brands and commercial capacities. The company’s revenue growth management efforts also helped it battle inflationary headwinds.

Quarter in Detail

Adjusted earnings came in at $1.54 per share, beating the Zacks Consensus Estimate of $1.51. The bottom line rose 18% from $1.30 per share in the year-ago quarter.

KimberlyClark Corporation Price, Consensus and EPS Surprise

KimberlyClark Corporation Price, Consensus and EPS Surprise

KimberlyClark Corporation price-consensus-eps-surprise-chart | KimberlyClark Corporation Quote

Kimberly-Clark’s sales came in at $4,964 million compared with the Zacks Consensus Estimate of $4,959 million. The metric remained in line with the year-ago period figure. Unfavorable foreign currency rates affected sales by 5%.

Organic sales advanced 7%, with net selling prices rising about 10%, and the product mix increasing sales by 1%. However, volumes tumbled 7%.

In North America, organic sales of consumer products climbed 1% year over year, while the same increased 18% in the K-C Professional segment. Outside North America, organic sales went up 3% in the developing and emerging (D&E) markets, and the same ascended 11% in developed markets.

The operating profit came in at $712 million, up from the $521 million reported in the year-ago quarter. Kimberly-Clark reported an adjusted operating profit of $611 million in the fourth quarter of 2022.

The operating profit declined due to a rise in input costs to the tune of $245 million. Reduced volumes, escalated marketing, research and general expenses and unfavorable foreign currency also affected the operating profit. These were somewhat offset by increased net selling prices, an improved product mix and cost savings of $115 million from the FORCE (Focused on Reducing Costs Everywhere) program.

Segment Details

Personal Care: Sales of $2,555 million inched down 3% year over year. Organic sales rose 2%. Net selling prices increased 7%, the product mix increased 2% and volumes declined 7%. Unfavorable foreign currency rates hurt sales by 5%.

The planned exit of a private label contract this year and retailer inventory changes were a two-point downside to global Personal Care sales. Sales were flat in North America, declined 6% in D&E markets, and dropped 4% across developed markets outside North America, including Australia, South Korea and Western/Central Europe.

Consumer Tissue: Segment sales of $1,560 million remained flat year over year. Organic sales increased 5%. Net selling prices improved sales by 11%, and volumes fell 6%. Unfavorable currency rates reduced sales by 5%. Sales rose 2% in North America, while the metric dropped 1% in D&E markets. The metric fell 3% across developed markets outside North America.

K-C Professional (KCP): Segment sales gained 11% to $838 million. Organic sales jumped 16%. Net selling prices increased 20%, while the product mix benefited sales by one point. Volumes hurt sales by 5% in the segment.

Changes in currency rates hurt sales by 5%. Sales grew 17% in North America, while the same increased 3% in the D&E markets. The metric grew 1% in developed markets outside North America.

Other Financial Updates

Kimberly-Clark ended the quarter with cash and cash equivalents of $427 million, long-term debt of $7,578 million and total stockholders’ equity of $700 million. Kimberly-Clark generated cash from operating activities of $991 million during the three months ended Dec 31, 2022.

Management incurred capital expenditures of $197 million in the quarter under review and $876 million in 2022. The company expects capital spending in the band of $800-$900 million in 2023.

Kimberly-Clark repurchased 0.2 million shares for $25 million in the reported quarter. In full-year 2022, the company repurchased 0.8 million shares for $100 million.

Management projected share buybacks in the band of $100-$150 million for 2023. Also, it announced a 1.7% hike in its quarterly dividend, taking it to $1.18 per share. The raised dividend is payable on Apr 4, 2023.

Guidance

Net sales growth in 2023 is expected in the range of flat to 2%, while organic sales are anticipated to increase 2-4%. Unfavorable foreign currency exchange rates are likely to hurt net sales by nearly 2%.

Management expects the operating profit to increase in the mid-to-high-single digits from the adjusted operating profit in 2022. This includes expectations of a $200-$300 million rise in input costs.

Further, management expects cost savings from the FORCE program to be in tandem with the year-ago period. Marketing, research and general spending are anticipated to increase due to continued business investments, including elevated advertising spending, along with general overall inflation. Currency headwinds are likely to lower the 2023 operating profit by about $300 to $400 million (or low double digits).

Management expects non-operating expenses to rise about $40 million from the adjusted non-operating expenses in 2022. Kimberly-Clark envisions 2023 earnings per share (EPS) to increase 2-6% from the adjusted EPS of 2022.

This Zacks Rank #3 (Hold) stock has rallied 12% in the past three months compared with the industry’s 9.2% growth.

Solid Consumer Staple Picks

Some better-ranked consumer staple stocks are e.l.f. Beauty, Inc. (ELF - Free Report) , Conagra Brands (CAG - Free Report) and Lamb Weston (LW - Free Report) .

e.l.f. Beauty, which provides cosmetic and skin care products, currently sports a Zacks Rank #1 (Strong Buy). ELF has a trailing four-quarter earnings surprise of 92.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales and EPS suggests an increase of 24.8% and 33.3%, respectively, from the year-ago reported number.

Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1. CAG has a trailing four-quarter earnings surprise of 8.9%, on average.

The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 6.8% and 11.9%, respectively, from the corresponding year-ago reported figures.

Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.

The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and EPS suggests an increase of 19.5% and 89.9%, respectively, from the year-ago reported number.


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