Back to top

Image: Bigstock

Kimberly-Clark (KMB) Q1 Earnings Top Estimates, Sales up

Read MoreHide Full Article

Kimberly-Clark Corporation (KMB - Free Report) reported first-quarter 2020 results, with the bottom line improving year over year. Earnings also surpassed the Zacks Consensus Estimate, marking its fifth consecutive beat. Moreover, the top line increased year over year and beat the consensus mark. The quarterly performance reflected sales growth across all segments, savings from restructuring plans and increased business investments. We note that, shares of the company were up 1.6% during the pre-market trading session.

However, given the current situation related to the coronavirus outbreak and its unpredictable impact on economic activities as well as consumer and end-market demand worldwide, Kimberly-Clark is withdrawing its full-year 2020 guidance that was issued on Jan 23. Further, management is temporarily suspending its share buyback plans effective Apr 24.

Apart from these, management expects that certain restructuring activity and the related charges as a part of its 2018 Global Restructuring Program will extend into 2021 due to the pandemic. Earlier, the company had anticipated these activities to be completed by the end of 2020.

Kimberly-Clark Corporation Price, Consensus and EPS Surprise

 

Kimberly-Clark Corporation Price, Consensus and EPS Surprise

Kimberly-Clark Corporation price-consensus-eps-surprise-chart | Kimberly-Clark Corporation Quote


Quarter in Detail

Adjusted earnings came in at $2.13 per share, which surpassed the Zacks Consensus Estimate of $2.01 and increased 28% from the year-ago quarter’s figure.

Kimberly-Clark’s sales came in at $5,009 million, which surpassed the Zacks Consensus Estimate of $4,894 million. The top line increased 8% year over year. Unfavorable currency movements put pressure on sales by 2%. Also, business exits pertaining to the 2018 Global Restructuring Program had a slight impact on sales.

Organic sales rose 11% year over year, owing to more than 8% rise in volumes due to consumer stockpiling amid coronavirus outbreak. Also, both net selling prices and product mix inched up 1% each.

In North America, organic sales in consumer products and K-C Professional increased 11% and 6%, respectively. Internationally, organic sales increased 9% across developing and emerging markets, while it grew 15% in developed markets.

Adjusted operating profit came in at $997 million, up from $807 million in the year-ago quarter. Results gained from higher organic sales and cost savings of $100 million and $25 million from the FORCE (Focused On Reducing Costs Everywhere) program and the 2018 Global Restructuring Program, respectively. Further, lower input costs stemming from a decline in pulp costs benefited results. However, unfavorable currency translations, increased advertising expenses and a rise in selling, general and administrative costs negatively impacted adjusted operating profit.

Segment Details

Personal Care Products: Sales of $2,422 million rose 6% year over year, owing to improved net selling prices (up 1%), product mix (up 2%) and volumes (up roughly 7%). This was offset by unfavorable currency rates, which hurt sales by 3%. Further, sales increased 10% in North America as well as 3% in developing and emerging markets. The metric also grew 5% across developed markets outside North America.

Consumer Tissue: Segment sales of $1,723 million rose 13% year over year. Results gained from improved net selling prices (up 1%) and volumes (up 14%). Adverse currency movements hurt sales by 2%. Sales grew 12% in North America and 10% in developing and emerging markets. The metric increased 17% in developed markets outside North America.

K-C Professional (KCP): Segment sales increased 4% to $848 million owing to improved net selling prices (up 2%), product mix (up 1%) and volumes (up 4%). This was offset by 1% adverse impact from several business exits as part of the 2018 Global Restructuring Plan. Also, currency woes hurt sales by 2%. Sales rose 5% in North America and 2% in developing and emerging markets. The metric increased 5% in developed markets outside North America.

Other Financial Updates

The company ended the quarter with cash and cash equivalents of $979 million, long-term debt of $7,210 million and stockholders’ equity of $46 million.

Further, Kimberly-Clark generated cash from operating activities of $704 million during the quarter under review. Management incurred capital expenditures of $352 million.

During the quarter, Kimberly-Clark bought back 1.6 million shares for $224 million

Notably, this Zacks Rank #2 (Buy) stock has rallied 14.4% in a year against the industry’s decline of 14.4%.

 



3 Other Consumer Staples Stocks Worth a Look

The Clorox Company (CLX - Free Report) , with a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Campbell Soup Company (CPB - Free Report) has a long-term earnings growth rate of 7.2% and a Zacks Rank #2.

General Mills (GIS - Free Report) has a long-term earnings growth rate of 7% and a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Published in