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Kimberly-Clark (KMB) Looks Poised on Robust Demand & Savings
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Kimberly-Clark Corporation (KMB - Free Report) is gaining from higher consumer demand for its products thanks to the coronavirus outbreak. Moreover, the company’s robust cost-saving plans and focus on key strategic growth pillars is yielding. We note that Kimberly-Clark’s shares have gained 3.3% in the year-to-date period against the industry’s decline of 6.6%.
Let’s delve deeper.
Coronavirus-Led Demand & Lifted Outlook
Burgeoning demand amid coronavirus pandemic bolstered the company’s third-quarter 2020 sales, which surpassed the Zacks Consensus Estimate and inched up 1% year over year. Moreover, Organic sales rose 3% driven by increased demand amid the pandemic. Volumes in the quarter rose 2%.
Impressively, management raised its outlook for 2020. The company forecasts 2020 net sales to grow 2-3% year over year. Earlier, it anticipated the metric to increase 1-2%. Further, Kimberly-Clark now projects organic sales improvement of 5% compared with earlier assumption of 4-5% growth. The company now envisions 2020 adjusted earnings per share (EPS) in the range of $7.50-$7.65, which indicates an increase from $6.89 reported in 2019. Prior to this, management expected adjusted EPS in the band of $7.40-$7.60.
Other Growth Drivers
Kimberly-Clark is undertaking significant measures to lower costs. This is highlighted from the 2018 Global Restructuring Program and the Focus on Reducing Costs Everywhere or FORCE Program. The 2018 Global Restructuring Program, which is the company’s biggest restructuring plan, focuses on enhancing profitability by simplifying the supply chain and manufacturing structures. This enables Kimberly-Clark to compete better and provides it more flexibility to undertake growth-oriented investments.
Until the end of third-quarter 2020, Kimberly-Clark generated cumulative savings worth $395 million from the 2018 Global Restructuring Program. Management is on track to generate pre-tax savings of $500-$550 million from this program by the end of 2021. Although some of these realizations could occur in 2022 due to uncertainties in regard to the coronavirus outbreak.
Moreover, Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through its FORCE Program. The program is generating solid cost savings for a while which are in turn driving its performance. During the third quarter, the company generated cost savings of $125 million and $15 million from the FORCE program and the 2018 Global Restructuring Program, respectively.
Further, Kimberly-Clark is committed toward its three key strategic growth pillars. These include focus on improving its core business in the developed markets; ramp up growth in the Personal Care segment in developing and emerging markets as well as enhance digital and e-commerce capacities. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales.
Management has been progressing well with these objectives, which have been aiding portfolio and expanding global business. Notably, Kimberly-Clark recently completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market. The company expects the buyout to augment its market share in the personal care category in the Southeast Asia region.
Wrapping Up
Coronavirus-induced stay-at-home trend dealt a blow to Kimberly-Clark’s K-C Professional segment. During the third quarter, segment sales declined 16% and volumes were down 21% year over year. Apart from this, the company is battling escalated costs and currency headwinds.
Nevertheless, the aforementioned upsides are likely to help this Zacks Rank #3 (Hold) company keep its growth story going.
Newell Brands (NWL - Free Report) , with a Zacks Rank #1, has a long-term earnings growth rate of 2.9%.
Chewy (CHWY - Free Report) , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 22.3%, on average.
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Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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Kimberly-Clark (KMB) Looks Poised on Robust Demand & Savings
Kimberly-Clark Corporation (KMB - Free Report) is gaining from higher consumer demand for its products thanks to the coronavirus outbreak. Moreover, the company’s robust cost-saving plans and focus on key strategic growth pillars is yielding. We note that Kimberly-Clark’s shares have gained 3.3% in the year-to-date period against the industry’s decline of 6.6%.
Let’s delve deeper.
Coronavirus-Led Demand & Lifted Outlook
Burgeoning demand amid coronavirus pandemic bolstered the company’s third-quarter 2020 sales, which surpassed the Zacks Consensus Estimate and inched up 1% year over year. Moreover, Organic sales rose 3% driven by increased demand amid the pandemic. Volumes in the quarter rose 2%.
Impressively, management raised its outlook for 2020. The company forecasts 2020 net sales to grow 2-3% year over year. Earlier, it anticipated the metric to increase 1-2%. Further, Kimberly-Clark now projects organic sales improvement of 5% compared with earlier assumption of 4-5% growth. The company now envisions 2020 adjusted earnings per share (EPS) in the range of $7.50-$7.65, which indicates an increase from $6.89 reported in 2019. Prior to this, management expected adjusted EPS in the band of $7.40-$7.60.
Other Growth Drivers
Kimberly-Clark is undertaking significant measures to lower costs. This is highlighted from the 2018 Global Restructuring Program and the Focus on Reducing Costs Everywhere or FORCE Program. The 2018 Global Restructuring Program, which is the company’s biggest restructuring plan, focuses on enhancing profitability by simplifying the supply chain and manufacturing structures. This enables Kimberly-Clark to compete better and provides it more flexibility to undertake growth-oriented investments.
Until the end of third-quarter 2020, Kimberly-Clark generated cumulative savings worth $395 million from the 2018 Global Restructuring Program. Management is on track to generate pre-tax savings of $500-$550 million from this program by the end of 2021. Although some of these realizations could occur in 2022 due to uncertainties in regard to the coronavirus outbreak.
Moreover, Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through its FORCE Program. The program is generating solid cost savings for a while which are in turn driving its performance. During the third quarter, the company generated cost savings of $125 million and $15 million from the FORCE program and the 2018 Global Restructuring Program, respectively.
Further, Kimberly-Clark is committed toward its three key strategic growth pillars. These include focus on improving its core business in the developed markets; ramp up growth in the Personal Care segment in developing and emerging markets as well as enhance digital and e-commerce capacities. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales.
Management has been progressing well with these objectives, which have been aiding portfolio and expanding global business. Notably, Kimberly-Clark recently completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market. The company expects the buyout to augment its market share in the personal care category in the Southeast Asia region.
Wrapping Up
Coronavirus-induced stay-at-home trend dealt a blow to Kimberly-Clark’s K-C Professional segment. During the third quarter, segment sales declined 16% and volumes were down 21% year over year. Apart from this, the company is battling escalated costs and currency headwinds.
Nevertheless, the aforementioned upsides are likely to help this Zacks Rank #3 (Hold) company keep its growth story going.
Some Solid Staple Bets
Grocery Outlet (GO - Free Report) , with a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 14.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Newell Brands (NWL - Free Report) , with a Zacks Rank #1, has a long-term earnings growth rate of 2.9%.
Chewy (CHWY - Free Report) , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 22.3%, on average.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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