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Kimberly-Clark (KMB) Q1 Earnings Top Estimates, Ups EPS View
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Kimberly-Clark Corporation (KMB - Free Report) reported first-quarter 2023 results, with the top and bottom lines beating the Zacks Consensus Estimate. Sales and earnings increased year over year. Results gained from revenue growth management efforts which fueled continued sales momentum with better-than-anticipated elasticity impact on volume. Management raised its 2023 earnings per share (EPS) outlook.
Quarter in Detail
Adjusted earnings were $1.67 per share, beating the Zacks Consensus Estimate of $1.34 and our estimate of $1.30. The bottom line rose 24% year over year on higher operating profit.
Kimberly-Clark’s sales totaled $5,195 million, surpassing the consensus estimate of $5,082 million and our estimate of $5,022.2 million. The metric increased 2% compared with the year-ago period’s figure.
Organic sales increased 5%, with 10% rise in price and a favorable product mix stemming from the ongoing revenue growth management programs. These were offset by a 5% decline in volume. Unfavorable foreign currency rates affected sales by nearly 4%. On a combined two-year basis, organic growth rose 8%.
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
In North America, sales rose 5% year over year, which included 2% growth in Personal Care, 5% increase in Consumer Tissue and 12% improvement in K-C Professional. Outside North America, organic sales rose 4% in developing and emerging markets while it increased 10% in developed markets (Australia, South Korea and Western/Central Europe).
Gross margin expanded 340 basis points (bps) to 33.2%. The upside can be attributed to increased net revenue realization and cost savings. This was countered by increased input costs to the tune of $160 million.
Adjusted operating profit grew 25% on higher gross profit including $105 million of FORCE (Focus on Reducing Costs Everywhere) savings. These were offset by marketing, research and general expenses. Kimberly-Clark’s operating margin came in at 15.1%, up 280 bps compared with the year-ago quarter’s adjusted operating margin.
Segment Details
Personal Care: Segment sales of $2,704 million inched down 1% year over year. Organic sales rose 3% on favorable price and mix somewhat offset by reduced volume. Organic sales reflected one percentage point unfavorable impact from the exit of a private label contract. Management highlighted that robust revenue growth management and commercial execution led to positive trends in net revenue realization as well as better-than-anticipated elasticities.
Consumer Tissue: Segment sales of $1,634 million rose 4% year over year. Impressive revenue growth management and enhanced service levels led to sales growth. Organic sales increased 7% on favorable pricing. This was somewhat offset by drab volume. That said, the company saw organic growth in all major regions in the segment.
K-C Professional: Segment sales gained 9% to $847 million, fueled by solid revenue growth management. Organic sales jumped 11% on favorable price and mix. These were somewhat offset by lower volume. The company witnessed organic growth across key categories and regions in the segment.
Other Financial Updates
Kimberly-Clark ended the quarter with cash and cash equivalents of $524 million, long-term debt of $7,945 million and total stockholders’ equity of $861 million. KMB generated cash from operating activities of $613 million during the three months ended Mar 31.
Management incurred capital spending of $201 million in the quarter under review.
Kimberly-Clark concluded its share repurchases of 265,000 for $34 million in the reported quarter. Management projected share buybacks in the band of $100-$150 million for 2023.
Image Source: Zacks Investment Research
Guidance
Management still anticipates net sales growth in 2023 in the range of flat to 2%, while organic sales are projected to increase 2-4%. Unfavorable foreign currency exchange rates are likely to hurt net sales by 2%.
Management now expects operating profit to grow in low double digits compared with an increase of mid-to-high single digits projected earlier. This includes expectations of a $100-$200 million rise in input costs. Currency headwinds are likely to lower the 2023 operating profit by about $300 million to $400 million.
Kimberly-Clark envisions 2023 EPS to increase 6-10% from the adjusted EPS of 2022. Earlier it was anticipated to increase in the range of 2-6%. Effective tax rate is likely to be in the band of 23-25%.
This Zacks Rank #3 (Hold) stock has gained 9.3% in the past three months against the industry’s 6.7% decline.
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests increases of 27.2% and 111.1%, respectively, from the year-ago reported number.
General Mills, a branded consumer food company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests improvements of 7.1% and 16.5%, respectively, from the year-ago reported number.
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Kimberly-Clark (KMB) Q1 Earnings Top Estimates, Ups EPS View
Kimberly-Clark Corporation (KMB - Free Report) reported first-quarter 2023 results, with the top and bottom lines beating the Zacks Consensus Estimate. Sales and earnings increased year over year. Results gained from revenue growth management efforts which fueled continued sales momentum with better-than-anticipated elasticity impact on volume. Management raised its 2023 earnings per share (EPS) outlook.
Quarter in Detail
Adjusted earnings were $1.67 per share, beating the Zacks Consensus Estimate of $1.34 and our estimate of $1.30. The bottom line rose 24% year over year on higher operating profit.
Kimberly-Clark’s sales totaled $5,195 million, surpassing the consensus estimate of $5,082 million and our estimate of $5,022.2 million. The metric increased 2% compared with the year-ago period’s figure.
Organic sales increased 5%, with 10% rise in price and a favorable product mix stemming from the ongoing revenue growth management programs. These were offset by a 5% decline in volume. Unfavorable foreign currency rates affected sales by nearly 4%. On a combined two-year basis, organic growth rose 8%.
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
Kimberly-Clark Corporation price-consensus-eps-surprise-chart | Kimberly-Clark Corporation Quote
In North America, sales rose 5% year over year, which included 2% growth in Personal Care, 5% increase in Consumer Tissue and 12% improvement in K-C Professional. Outside North America, organic sales rose 4% in developing and emerging markets while it increased 10% in developed markets (Australia, South Korea and Western/Central Europe).
Gross margin expanded 340 basis points (bps) to 33.2%. The upside can be attributed to increased net revenue realization and cost savings. This was countered by increased input costs to the tune of $160 million.
Adjusted operating profit grew 25% on higher gross profit including $105 million of FORCE (Focus on Reducing Costs Everywhere) savings. These were offset by marketing, research and general expenses. Kimberly-Clark’s operating margin came in at 15.1%, up 280 bps compared with the year-ago quarter’s adjusted operating margin.
Segment Details
Personal Care: Segment sales of $2,704 million inched down 1% year over year. Organic sales rose 3% on favorable price and mix somewhat offset by reduced volume. Organic sales reflected one percentage point unfavorable impact from the exit of a private label contract. Management highlighted that robust revenue growth management and commercial execution led to positive trends in net revenue realization as well as better-than-anticipated elasticities.
Consumer Tissue: Segment sales of $1,634 million rose 4% year over year. Impressive revenue growth management and enhanced service levels led to sales growth. Organic sales increased 7% on favorable pricing. This was somewhat offset by drab volume. That said, the company saw organic growth in all major regions in the segment.
K-C Professional: Segment sales gained 9% to $847 million, fueled by solid revenue growth management. Organic sales jumped 11% on favorable price and mix. These were somewhat offset by lower volume. The company witnessed organic growth across key categories and regions in the segment.
Other Financial Updates
Kimberly-Clark ended the quarter with cash and cash equivalents of $524 million, long-term debt of $7,945 million and total stockholders’ equity of $861 million. KMB generated cash from operating activities of $613 million during the three months ended Mar 31.
Management incurred capital spending of $201 million in the quarter under review.
Kimberly-Clark concluded its share repurchases of 265,000 for $34 million in the reported quarter. Management projected share buybacks in the band of $100-$150 million for 2023.
Image Source: Zacks Investment Research
Guidance
Management still anticipates net sales growth in 2023 in the range of flat to 2%, while organic sales are projected to increase 2-4%. Unfavorable foreign currency exchange rates are likely to hurt net sales by 2%.
Management now expects operating profit to grow in low double digits compared with an increase of mid-to-high single digits projected earlier. This includes expectations of a $100-$200 million rise in input costs. Currency headwinds are likely to lower the 2023 operating profit by about $300 million to $400 million.
Kimberly-Clark envisions 2023 EPS to increase 6-10% from the adjusted EPS of 2022. Earlier it was anticipated to increase in the range of 2-6%. Effective tax rate is likely to be in the band of 23-25%.
This Zacks Rank #3 (Hold) stock has gained 9.3% in the past three months against the industry’s 6.7% decline.
Solid Consumer Staple Picks
Some better-ranked consumer staple stocks are Lamb Weston (LW - Free Report) , General Mills (GIS - Free Report) and Conagra Brands (CAG - Free Report) .
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests increases of 27.2% and 111.1%, respectively, from the year-ago reported number.
General Mills, a branded consumer food company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests improvements of 7.1% and 16.5%, respectively, from the year-ago reported number.