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Kimberly-Clark (KMB) Q4 Earnings Lag Estimates, Inflation Hurts
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Kimberly-Clark Corporation (KMB - Free Report) posted drab fourth-quarter 2023 results, with the top and the bottom line missing the Zacks Consensus Estimate. Earnings declined year over year while sales remained unchanged. Management announces a hike in quarterly dividend.
Quarter in Detail
Adjusted earnings came in at $1.51 per share, missing the Zacks Consensus Estimate of $1.53. The bottom line fell 2% year over year, mainly due to hyperinflationary economies and increased taxes. These were somewhat countered by gross profit expansion.
Kimberly-Clark’s sales totaled $4,970 million missing the consensus estimate of $4,985.8 million. The metric remained flat compared with the year-ago period’s figure.
Organic sales increased 3% on the back of a 2% rise in price stemming from ongoing revenue growth management programs and a 1% positive product mix. Volumes remained unchanged from the year-ago quarter’s levels. Unfavorable foreign currency rates affected sales by nearly 2% and the divestiture of KMB’s tissue and K-C Professional business in Brazil dented sales by about 1%.
In North America, organic sales rose 3% year over year, which included 5% growth in Personal Care, a 3% increase in Consumer Tissue. These were somewhat offset by a 3% decline in the K-C Professional.
Outside North America, organic sales rose 5% in developing and emerging markets. In the developed markets (Australia, South Korea and Western/Central Europe) the metric inched up 1%.
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
The gross profit increased 7%, which includes $50 million in FORCE (Focus on Reducing Costs Everywhere) savings and $50 million in reduced input costs. The gross margin expanded 210 basis points (bps) to 34.9%. The upside can be attributed to increased net revenue realization, cost savings and lower input costs. These were somewhat offset by adverse impacts from unfavorable currency rates and increased other manufacturing costs. Our model suggested a gross margin expansion of 100 bps to 33.8%.
The operating profit fell 6% to $670 million, thanks to unfavorable currency impacts. Planned increases in marketing, research and general expenses and increased incentive compensation levels were a concern. Kimberly-Clark’s operating margin came in at 13.5%. Our model suggested an operating margin of 14.5%.
Segment Details
Personal Care: Segment sales of $2,602 million inched up 2% year over year, surpassing our estimate of 1.6% growth. Organic sales rose 6% on a favorable price, mix and volumes. Management highlighted that innovation, strong commercial execution and better supply trends led to volume growth.
Consumer Tissue: Segment sales of $1,540 million dropped 1% year over year. Our model suggested a sales decline of 1.3% in the segment. Organic sales remained flat year over year, reflecting price gains of 1% mitigated by 1% volume decline.
K-C Professional: Segment sales fell 3% to $816 million in comparison. Organic sales inched down 1%. Favorable product mix and revenue realization were offset by reduced volumes. The company’s strategic investments continue to better consumer experiences and demand in the unit.
Other Financial Updates
Kimberly-Clark ended the quarter with cash and cash equivalents of $1,093 million, long-term debt of $7,417 million and total stockholders’ equity of $1,068 million.
Cash provided by operations was $3.5 billion for 2023. Management incurred capital spending of $766 million in the same time frame.
Kimberly-Clark concluded share repurchases of 1.8 million shares for $225 million during 2023. It returned $1.8 billion to shareholders via dividends and share buybacks.
In a separate press release, Kimberly-Clark announced a 3.4% quarterly dividend hike to reach $1.22 per share. The increased dividend will be paid on Apr 2, 2024, to shareholders record as of Mar 8, 2024. This marks the company’s 52nd consecutive year of dividend hike.
Image Source: Zacks Investment Research
2024 Guidance
Management anticipates organic net sales to increase low-to-mid single digit percentage. Reported net sales growth is likely to reflect an unfavorable currency impact to the tune of nearly 300 bps and a 60bps headwind from the Brazil Tissue divestiture. Adjusted operating profit is projected to grow at a high single-digit to low double-digit rate on a constant-currency (cc) basis in 2024. Adjusted earnings per share (EPS) is anticipated to grow at high single-digit rate on a cc basis.
This Zacks Rank #3 (Hold) stock has increased 5.2% in the past three months compared with the industry’s growth of 7.9%.
Solid Staple Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, carries a Zacks Rank #2 (Buy). INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.
Sysco Corporation (SYY - Free Report) , a food and related product company, currently has a Zacks Rank #2. SYY delivered a positive earnings surprise in the last two quarters.
The Zacks Consensus Estimate for Sysco’s current fiscal sales and earnings suggests growth of 4.1% and almost 8%, respectively, from the corresponding year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.2% and 26.9%, respectively, from the year-ago reported numbers.
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Kimberly-Clark (KMB) Q4 Earnings Lag Estimates, Inflation Hurts
Kimberly-Clark Corporation (KMB - Free Report) posted drab fourth-quarter 2023 results, with the top and the bottom line missing the Zacks Consensus Estimate. Earnings declined year over year while sales remained unchanged. Management announces a hike in quarterly dividend.
Quarter in Detail
Adjusted earnings came in at $1.51 per share, missing the Zacks Consensus Estimate of $1.53. The bottom line fell 2% year over year, mainly due to hyperinflationary economies and increased taxes. These were somewhat countered by gross profit expansion.
Kimberly-Clark’s sales totaled $4,970 million missing the consensus estimate of $4,985.8 million. The metric remained flat compared with the year-ago period’s figure.
Organic sales increased 3% on the back of a 2% rise in price stemming from ongoing revenue growth management programs and a 1% positive product mix. Volumes remained unchanged from the year-ago quarter’s levels. Unfavorable foreign currency rates affected sales by nearly 2% and the divestiture of KMB’s tissue and K-C Professional business in Brazil dented sales by about 1%.
In North America, organic sales rose 3% year over year, which included 5% growth in Personal Care, a 3% increase in Consumer Tissue. These were somewhat offset by a 3% decline in the K-C Professional.
Outside North America, organic sales rose 5% in developing and emerging markets. In the developed markets (Australia, South Korea and Western/Central Europe) the metric inched up 1%.
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
Kimberly-Clark Corporation price-consensus-eps-surprise-chart | Kimberly-Clark Corporation Quote
The gross profit increased 7%, which includes $50 million in FORCE (Focus on Reducing Costs Everywhere) savings and $50 million in reduced input costs. The gross margin expanded 210 basis points (bps) to 34.9%. The upside can be attributed to increased net revenue realization, cost savings and lower input costs. These were somewhat offset by adverse impacts from unfavorable currency rates and increased other manufacturing costs. Our model suggested a gross margin expansion of 100 bps to 33.8%.
The operating profit fell 6% to $670 million, thanks to unfavorable currency impacts. Planned increases in marketing, research and general expenses and increased incentive compensation levels were a concern. Kimberly-Clark’s operating margin came in at 13.5%. Our model suggested an operating margin of 14.5%.
Segment Details
Personal Care: Segment sales of $2,602 million inched up 2% year over year, surpassing our estimate of 1.6% growth. Organic sales rose 6% on a favorable price, mix and volumes. Management highlighted that innovation, strong commercial execution and better supply trends led to volume growth.
Consumer Tissue: Segment sales of $1,540 million dropped 1% year over year. Our model suggested a sales decline of 1.3% in the segment. Organic sales remained flat year over year, reflecting price gains of 1% mitigated by 1% volume decline.
K-C Professional: Segment sales fell 3% to $816 million in comparison. Organic sales inched down 1%. Favorable product mix and revenue realization were offset by reduced volumes. The company’s strategic investments continue to better consumer experiences and demand in the unit.
Other Financial Updates
Kimberly-Clark ended the quarter with cash and cash equivalents of $1,093 million, long-term debt of $7,417 million and total stockholders’ equity of $1,068 million.
Cash provided by operations was $3.5 billion for 2023. Management incurred capital spending of $766 million in the same time frame.
Kimberly-Clark concluded share repurchases of 1.8 million shares for $225 million during 2023. It returned $1.8 billion to shareholders via dividends and share buybacks.
In a separate press release, Kimberly-Clark announced a 3.4% quarterly dividend hike to reach $1.22 per share. The increased dividend will be paid on Apr 2, 2024, to shareholders record as of Mar 8, 2024. This marks the company’s 52nd consecutive year of dividend hike.
Image Source: Zacks Investment Research
2024 Guidance
Management anticipates organic net sales to increase low-to-mid single digit percentage. Reported net sales growth is likely to reflect an unfavorable currency impact to the tune of nearly 300 bps and a 60bps headwind from the Brazil Tissue divestiture. Adjusted operating profit is projected to grow at a high single-digit to low double-digit rate on a constant-currency (cc) basis in 2024. Adjusted earnings per share (EPS) is anticipated to grow at high single-digit rate on a cc basis.
This Zacks Rank #3 (Hold) stock has increased 5.2% in the past three months compared with the industry’s growth of 7.9%.
Solid Staple Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, carries a Zacks Rank #2 (Buy). INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.
Sysco Corporation (SYY - Free Report) , a food and related product company, currently has a Zacks Rank #2. SYY delivered a positive earnings surprise in the last two quarters.
The Zacks Consensus Estimate for Sysco’s current fiscal sales and earnings suggests growth of 4.1% and almost 8%, respectively, from the corresponding year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.2% and 26.9%, respectively, from the year-ago reported numbers.