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Kimberly-Clark Firm on Restructuring Plans & Innovation
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Kimberly-Clark Corporation (KMB - Free Report) is gaining sheen on robust restructuring plans, focus on innovation and strength in key growth pillars. These factors, which fueled the company’s third-quarter 2019 results, have long been driving investors’ optimism in the stock. Notably, this Zacks Rank #3 (Hold) stock has rallied 24.1% so far this year, against the industry’s decline of 8.7%. Let’s delve deeper into the factors aiding Kimberly-Clark despite rising costs and softness in the K-C Professional segment.
Restructuring Plans a Major Driver
Kimberly-Clark has been taking robust steps to lower costs through its 2018 Global Restructuring Program as well as the Focus on Reducing Costs Everywhere or FORCE Program. The 2018 Global Restructuring Program concentrates on enhancing the company’s profitability by simplifying the supply chain and manufacturing structures. This helps the company compete better and provides it greater flexibility to undertake growth-oriented investments. Until the third quarter of 2019, Kimberly-Clark generated cumulative savings worth $260 million from the 2018 Global Restructuring Program.
Management earlier stated that it expects pre-tax savings of $500-$550 million from this program by the end of 2021, backed by production supply-chain efficiencies and reduction in workforce. Moreover, Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through the FORCE Program. The program is generating solid cost savings for a while now. During the third quarter, Kimberly-Clark generated savings of $95 million from the FORCE Program and the 2018 Global Restructuring Program (on a combined basis).
3 Growth Pillars & Innovation Bode Well
Kimberly-Clark is committed toward its three key growth pillars. These include focus on improving core business in the developed markets, accelerating growth in the Personal Care segment in developing and emerging markets, and enhancing 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. Apart from this, the company focuses on innovation, particularly in the training pant category, to drive growth. Further, the company plans to introduce products under its adult incontinence and tissue category. Also, the company announced a number of innovation plans, including upgrades on Poise pads and Huggies diapers.
Wrapping Up
The company’s K-C Professional segment has been grappling with dismal sales. After declining 2% and 5% in the first and second quarters of 2019, respectively, the segment’s sales dropped 1% in the third quarter due to adverse currency rates and several business exits (as part of the 2018 Global Restructuring Plan). Volumes were down 2%, somewhat compensated by improved product mix and higher net selling prices.
Nonetheless, we expect the company to offset these challenges with its aforementioned initiatives. Also, its restructuring plans are likely to help mitigate increased marketing, research and general expenses, and SG&A expenses. Encouragingly, management raised its bottom-line view for 2019 while reporting third-quarter results. The company now envisions 2019 earnings of $6.75-$6.90 per share, up from the prior forecast of $6.65-$6.80.
Beyond Meat (BYND - Free Report) , with a Zacks Rank #2 (Buy), has an impressive earnings surprise record.
Newell Brands (NWL - Free Report) , also with a Zacks Rank #2, has a long-term earnings per share growth rate of 6%.
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This outperformance has not just been a recent phenomenon. From 2000 – Q3 2019, while the S&P averaged +5.6% per year, our top strategies averaged up to +54.1% per year.
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Kimberly-Clark Firm on Restructuring Plans & Innovation
Kimberly-Clark Corporation (KMB - Free Report) is gaining sheen on robust restructuring plans, focus on innovation and strength in key growth pillars. These factors, which fueled the company’s third-quarter 2019 results, have long been driving investors’ optimism in the stock. Notably, this Zacks Rank #3 (Hold) stock has rallied 24.1% so far this year, against the industry’s decline of 8.7%. Let’s delve deeper into the factors aiding Kimberly-Clark despite rising costs and softness in the K-C Professional segment.
Restructuring Plans a Major Driver
Kimberly-Clark has been taking robust steps to lower costs through its 2018 Global Restructuring Program as well as the Focus on Reducing Costs Everywhere or FORCE Program. The 2018 Global Restructuring Program concentrates on enhancing the company’s profitability by simplifying the supply chain and manufacturing structures. This helps the company compete better and provides it greater flexibility to undertake growth-oriented investments. Until the third quarter of 2019, Kimberly-Clark generated cumulative savings worth $260 million from the 2018 Global Restructuring Program.
Management earlier stated that it expects pre-tax savings of $500-$550 million from this program by the end of 2021, backed by production supply-chain efficiencies and reduction in workforce. Moreover, Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through the FORCE Program. The program is generating solid cost savings for a while now. During the third quarter, Kimberly-Clark generated savings of $95 million from the FORCE Program and the 2018 Global Restructuring Program (on a combined basis).
3 Growth Pillars & Innovation Bode Well
Kimberly-Clark is committed toward its three key growth pillars. These include focus on improving core business in the developed markets, accelerating growth in the Personal Care segment in developing and emerging markets, and enhancing 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. Apart from this, the company focuses on innovation, particularly in the training pant category, to drive growth. Further, the company plans to introduce products under its adult incontinence and tissue category. Also, the company announced a number of innovation plans, including upgrades on Poise pads and Huggies diapers.
Wrapping Up
The company’s K-C Professional segment has been grappling with dismal sales. After declining 2% and 5% in the first and second quarters of 2019, respectively, the segment’s sales dropped 1% in the third quarter due to adverse currency rates and several business exits (as part of the 2018 Global Restructuring Plan). Volumes were down 2%, somewhat compensated by improved product mix and higher net selling prices.
Nonetheless, we expect the company to offset these challenges with its aforementioned initiatives. Also, its restructuring plans are likely to help mitigate increased marketing, research and general expenses, and SG&A expenses. Encouragingly, management raised its bottom-line view for 2019 while reporting third-quarter results. The company now envisions 2019 earnings of $6.75-$6.90 per share, up from the prior forecast of $6.65-$6.80.
Don’t Miss These Solid Consumer Staple Stocks
Boston Beer (SAM - Free Report) , with a Zacks Rank #1 (Strong Buy), has a long-term earnings per share growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Beyond Meat (BYND - Free Report) , with a Zacks Rank #2 (Buy), has an impressive earnings surprise record.
Newell Brands (NWL - Free Report) , also with a Zacks Rank #2, has a long-term earnings per share growth rate of 6%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q3 2019, while the S&P 500 gained +39.6%, five of our strategies returned +51.8%, +57.5%, +96.9%, +119.0%, and even +158.9%.
This outperformance has not just been a recent phenomenon. From 2000 – Q3 2019, while the S&P averaged +5.6% per year, our top strategies averaged up to +54.1% per year.
See their latest picks free >>