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Kimberly-Clark Second Quarter 2022 results
"I'm pleased to close the first half of the year with another quarter of excellent execution by our teams who delivered strong organic sales growth, with increases in all our segments. Our growth strategy is working," said Mike Hsu, Chairman and CEO, Kimberly-Clark. "Our results also reflect ongoing market volatility and significant input cost inflation. We continue to be thoughtful with our response to inflation, focusing on providing value to our consumers while leveraging price and cost discipline to mitigate macro headwinds for margin improvement over time." Hsu continued, "As we manage our business prudently in the near-term, we're committed to investing in our people, brands and capabilities to ensure we continue to be well positioned to deliver balanced and sustainable growth over the long-term." Second Quarter 2022 Operating Results Sales of $5.1 billion in the second quarter of 2022 increased 7 percent compared to the year-ago period. Changes in foreign currency exchange rates reduced sales 2 percent. Organic sales increased 9 percent as net selling prices rose 9 percent, product mix increased sales 1 percent and volumes declined 1 percent. In North America, organic sales increased 11 percent in consumer products and increased 8 percent in K-C Professional. Outside North America, organic sales rose 8 percent in developing and emerging (D&E) markets and 9 percent in developed markets. Second quarter operating profit was $621 million in 2022 and $613 million in 2021. Excluding the charges related to the 2018 Global Restructuring Program, 2021 adjusted operating profit was $676 million. Results were impacted by $405 million of higher input costs. Higher marketing, research and general expense as well as unfavorable foreign currency transaction effects reduced operating profit in the quarter. Results benefited from organic sales growth and $45 million of cost savings from the company's FORCE (Focused On Reducing Costs Everywhere) program. The second quarter effective tax rate was 21.8 percent in 2022 and 22.8 percent in 2021. The second quarter adjusted effective tax rate was 22.0 percent in 2022 and 22.5 percent in 2021. Kimberly-Clark's share of net income of equity companies in the second quarter was $29 million in 2022 and $28 million in 2021. Cash Flow and Balance Sheet Cash provided by operations in the second quarter was $740 million in 2022 and $565 million in 2021. The increase was driven by lower tax payments and reduced use of cash for working capital. Capital spending for the second quarter was $217 million in 2022 and $201 million in 2021. Second quarter share repurchases were 173 thousand shares at a cost of $23 million. Total debt was $8.7 billion as of June 30, 2022 and $8.6 billion at the end of 2021. Second Quarter 2022 Business Segment Results Personal Care Segment Second quarter sales of $2.7 billion increased 8 percent. Net selling prices increased 9 percent, product mix improved 1 percent while volumes declined 1 percent. The acquisition of the controlling interest in Thinx increased sales 1 point and changes in foreign currency exchange rates decreased sales by 2 percent. Second quarter operating profit of $466 million increased 3 percent. Results benefited from organic sales growth and cost savings. The comparison was impacted by input cost inflation, higher marketing, research and general spending as well as unfavorable foreign currency effects. Sales in North America increased 10 percent. Net selling prices increased 9 percent and the Thinx acquisition increased sales 1 percent. Organic sales were up in all personal care segments. Sales in D&E markets increased 7 percent. Net selling prices increased sales 12 percent and product mix improved 3 points while volumes declined 6 percent. Changes in foreign currency exchange rates decreased sales 2 percent. Organic sales growth was driven by Latin America and China. Sales in developed markets outside North America (Australia, South Korea and Western/Central Europe) increased 1 percent. Volumes increased 5 percent, net selling prices increased sales 4 percent and product mix improved sales 1 point. Changes in foreign currency exchange rates reduced sales 9 percent. Consumer Tissue Segment Second quarter sales of $1.5 billion increased 8 percent. Net selling prices increased sales 7 percent, volumes rose 3 percent and product mix improved sales 1 point. Changes in foreign currency exchange rates reduced sales 3 percent. Second quarter operating profit of $178 million decreased 9 percent. The comparison was impacted by input cost inflation and higher marketing, research and general spending. Results benefited from organic sales growth, lower other manufacturing costs and cost savings. Sales in North America increased 14 percent. Volumes grew 7 percent, net selling prices improved 6 percent, and product mix increased sales 1 point. The volume growth reflects comparison to the COVID-related consumer and retailer inventory destocking in the year-ago period. Sales in D&E markets increased 4 percent. Net selling prices rose 9 percent and product mix improved 3 percent, while volumes were down 7 percent. Changes in foreign currency exchange rates decreased sales 1 point. Sales in developed markets outside North America were even with year-ago. Net selling prices rose approximately 9 percent and volumes grew 2 percent. Changes in foreign currency exchange rates decreased sales 9 percent and exited businesses related to the 2018 Global Restructuring program reduced sales 1 point. K-C Professional (KCP) Segment Second quarter sales of $0.8 billion increased 5 percent. Net selling prices rose 9 percent and product mix increased sales 2 points while volumes declined 3 percent. Changes in foreign currency exchange rates decreased sales 3 percent. Second quarter operating profit of $85 million decreased 23 percent. The comparison was impacted by input cost inflation, lower volumes and higher marketing, research and general spending. Results benefited from higher net selling prices and cost savings. Sales in North America increased 8 percent. Net selling prices rose approximately 8 percent, product mix increased sales 2 percent while volumes declined 1 percent. Washroom products sales were up strong double-digits while sales of safety products decreased versus a strong year-ago. Sales in D&E markets increased 4 percent. Net selling prices increased 7 percent, product mix increased sales 1 point while volumes declined 2 percent. Changes in foreign currency exchange rates decreased sales 2 percent. Sales in developed markets outside North America decreased 3 percent. Changes in foreign currency exchange rates reduced sales 9 percent. Net selling prices increased 14 percent and product mix improved sales 2 percent while volumes declined 10 percent. Year-To-Date Results For the first six months of 2022, sales of $10.2 billion increased 7 percent. Organic sales increased 10 percent, as net selling prices rose 7 percent, volumes increased 1 percent and product mix increased sales approximately 1 point. Changes in foreign currency exchange rates decreased sales by approximately 2 percent. Year-to-date operating profit was $1,314 million in 2022 and $1,383 million in 2021. Results in 2022 include the net benefit of the acquisition of a controlling interest of Thinx. 2021 results include charges related to the 2018 Global Restructuring Program. Year-to-date adjusted operating profit was $1,250 million in 2022 and $1,480 million in 2021. Results were impacted by higher input costs, higher marketing, research and general spending and unfavorable foreign currency effects. Results benefited from organic sales growth, $95 million of FORCE savings and lower other manufacturing costs. Through six months, diluted net income per share was $2.84 in 2022 and $2.92 in 2021. Year-to-date adjusted earnings per share were $2.69 in 2022 and $3.27 in 2021. 2022 Outlook and Key Planning Assumptions The company updated key planning and guidance assumptions for full-year 2022. The outlook reflects a reasonable set of assumptions subject to change given the high level of volatility in the macro environment.
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