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Kimberly-Clark (KMB) Drives Growth Through Core Strategy Focus

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Kimberly-Clark Corporation (KMB - Free Report) is on track with its multi-year strategy aimed at achieving sustainable growth by leveraging its strengths and refining its strategic focus. The consumer products company is benefiting from a focus on revenue growth management. That being said, Kimberly-Clark maintains a cautious stance regarding the macroeconomic landscape.

Let’s discuss this in detail.

What’s Working Well for Kimberly-Clark?

The effective implementation of revenue growth management strategies (like pricing) and ongoing productivity initiatives have been aiding Kimberly-Clark’s organic sales and gross margin amid cost inflation. In the first quarter of 2024, the company’s organic sales increased 6% on the back of a 4% rise in price owing to pricing actions undertaken to tackle increased local costs in hyperinflationary economies, especially across Argentina.

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As part of its strategic growth efforts, Kimberly-Clark is accelerating pioneering innovation to address unmet consumer needs via groundbreaking technologies. In the past three years, its new product launches have accounted for more than 50% of net sales in the Consumer businesses, playing a major role in driving almost 60% of incremental Consumer organic growth in the first quarter of 2024. Management is also focused on optimizing its margin structure. In this regard, the company emphasizes on robust and continuous stream of cost savings to drive investments in innovation and capabilities.

Lastly, KMB’s wiring organization for growth strategy is based on strengthening and streamlining the enterprise to enhance agility and efficiency. Management is refining its portfolio focus by concentrating on businesses that bolster market positions. This ensures that resources and investments are directed toward key competitive areas and core categories.

Hurdles on the Way

Kimberly-Clark maintains a careful outlook on the macroeconomic environment due to ongoing volatility and possible challenges, such as increasing input expenses and currency fluctuations. The company remains vigilant amid ongoing geopolitical uncertainties. Although the company’s gross margin expanded in the first quarter of 2024, it was affected by local inflation in developing and hyperinflationary markets, along with supply chain-related investments. The company anticipates encountering cost inflationary pressures stemming from the recent surge in energy expenses, compounded by currency challenges impacting local costs in developing markets.

Wrapping Up

All that being said, Kimberly-Clark’s focus on innovation, consumer-centric approach and strategic investments in product development have been leading to successful launches and market expansion. The company is focused on long-term growth opportunities, including leveraging its brand investments, enhancing its product mix and driving volume growth through consumer-focused strategies.

Management anticipates fiscal 2024 organic net sales to increase in mid-single-digit percentage. Adjusted earnings per share (EPS) is expected to grow at a low-teens percentage rate at constant currency for fiscal 2024.

The Zacks Rank #3 (Hold) company’s shares have increased 14.7% in the past three months compared with the industry’s 5.9% growth.

Stocks to Consider

McCormick & Company, Inc. (MKC - Free Report) is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for McCormick & Company’s current fiscal-year sales and earnings indicates advancements of 0.3% and 5.6%, respectively, from the year-ago reported figures. MKC has a trailing four-quarter earnings surprise of 5.4%, on average.

The J. M. Smucker Company (SJM - Free Report) , a branded food and beverage product company, currently carries a Zacks Rank #2. SJM has a trailing four-quarter earnings surprise of 7.5%, on average.

The Zacks Consensus Estimate for J. M. Smucker’s current fiscal year earnings indicates growth of 7.6% from the year-ago reported figure.

Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2% on average.

The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 24.6% from the year-ago reported numbers.

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