Kimberly-Clark Corporation KMB has reported third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate and improved year over year. Meanwhile, sales missed the consensus mark and declined year over year. The company’s organic sales grew year over year, driven by robust pricing.
Adjusted earnings were $1.83 per share, surpassing the Zacks Consensus Estimate of $1.69. The bottom line increased 5% year over year, courtesy of higher adjusted operating profit.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Kimberly-Clark’s sales totaled $4,952 million, missing the consensus estimate of $5,063 million. The metric dropped 4% compared with the year-ago period’s figure. Unfavorable foreign currency rates affected sales by nearly 3% and the divestiture of KMB’s tissue and K-C Professional Personal Protective Equipment dented sales by about 1%.
The overall results reflect market share gains and enhanced productivity, even amid a dynamic consumer landscape. The company is successfully advancing its Powering Care strategy by accelerating its innovation pipeline, reducing costs and simplifying its operational structure to provide higher-quality consumer solutions. While management has revised its organic sales outlook downward, it reaffirms its earnings guidance for 2024.
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
Kimberly-Clark Corporation Price, Consensus and EPS Surprise
Organic sales inched up 1% on the back of a 1% rise in price stemming from pricing actions undertaken to tackle increased local costs in hyperinflationary economies, especially across Argentina. Our model suggests pricing to increase by 2.1% in the quarter. Volume and mix remained flat year over year. Volumes and mix showed positive growth in Developed Markets, including Australia, South Korea and Western/Central Europe, offset by a decline in North America. Meanwhile, volumes in Developing and Emerging (D&E) markets remained consistent with the previous year.
In North America, organic sales fell by 1%, due to a 3% decline in K-C Professional and a 1% drop in Consumer Tissue, while Personal Care sales remained stable year over year.
In D&E markets, organic sales increased by 8%, driven by pricing gains in hyperinflationary economies. Organic sales in Developed Markets decreased by 2%, attributed to lower pricing.
The adjusted gross margin expanded 90 basis points (bps) to 36.7%. The upside can be attributed to solid gross productivity gains.
The adjusted operating profit increased 5%, despite the adverse impact of unfavorable currency translations to the tune of 4% points stemming from hyperinflationary economies. Excluding currency impacts, the growth in adjusted operating profit was driven by gross productivity gains, stable pricing when adjusted for cost inflation, supply chain investments and planned increases in marketing, research and general expenses.
KMB Provides Third-Quarter Insights by Segment
Personal Care: Segment sales of $2,635 million fell 2% year over year. Organic sales rose by 3%, driven by pricing actions in hyperinflationary economies and improvements in the mix, while volume remained consistent with the previous year’s level across all markets. Segmental operating profit amounted to $482 million, down 4%.
Consumer Tissue: Segment sales of $1,539 million dropped 2% year over year. Our model suggested a sales decline of 1% in the segment. Organic sales inched down 1%, due to retailer inventory reductions in North America and anticipated lower pricing in Western Europe. Segmental operating profit amounted to $265 million, down 1%.
K-C Professional: Segment sales slumped 10% to $767 million due to unfavorable currency rates, divestitures and business exits. Our model suggested a sales decline of 7.5% in the segment. Organic sales inched down 1%, attributed to unfavorable pricing impact. The operating profit in the segment stood at $161 million, down 4%.
Kimberly-Clark’s Financial Health Snapshot
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $1,111 million, long-term debt of $6,882 million and total stockholders’ equity of $1,444 million.
Cash provided by operations was $2,417 million for nine months ended Sept. 30, 2024. Management incurred capital spending of $512 million in the same time frame. It returned $2 billion to shareholders via dividends and share buybacks.
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What to Expect From KMB in 2024?
Organic net sales are now projected to grow between 3% and 4%, compared to a previously anticipated mid-single-digit growth rate, due to specific challenges related to changes in retail inventory levels. Reported net sales are likely to reflect an unfavorable currency impact to the tune of nearly 400 bps and a 120-bps headwind from divestitures.
The adjusted operating profit is still projected to grow at a mid-to-high teens percentage rate on a constant-currency (cc) basis in 2024. The adjusted earnings per share (EPS) is also still anticipated to rise at a mid-to-high teens percentage rate at cc.
KMB’s stock has increased 6.1% in the past three months compared with the industry’s growth of 7.9%.
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