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Kimberly-Clark Announces First Quarter 2023 Results
Net sales growth up 2 percent, organic growth up 5 percent Revenue Growth Management program drives significant margin improvements Company raises 2023 outlook for EPS growth Kimberly-Clark Corporation (NYSE: KMB) has recently reported its first quarter 2023 results. Comparisons are made versus the prior year period, unless otherwise noted. "I'm proud of our teams around the world for a strong start to the year. We grew organic sales by 5 percent, which reflects the health of our categories and the essential nature of our products," said chairman and CEO Mike Hsu. "Our growth strategy continues to deliver behind strong execution of our commercial programs. Revenue growth management initiatives drove continued sales momentum with a better-than-expected elasticity impact on volume. Looking ahead, we have an exciting innovation pipeline that will deliver superior performance in health, wellness and sustainability. With our strong portfolio of trusted brands, we have our sights set on growing our categories and winning with consumers to enable long-term, profitable growth." Hsu continued, "While inflationary pressures have yet to subside, we drove continued improvement in our gross margin this quarter. We will continue to lean into our productivity and cost savings programs to mitigate elevated costs, while strategically investing in future growth platforms that will expand our presence in attractive markets for years to come." Quarter Highlights
Strategic Highlights
First Quarter 2023 Results First quarter sales of $5.2 billion increased 2 percent, with organic sales up 5 percent, driven by a 10 percent increase in price and favorable product mix from ongoing revenue growth management programs offset by a 5 percent decrease in volume. Changes in foreign currency exchange rates decreased sales by approximately 4 percent. On a combined two year basis, organic growth increased 8 percent. In North America, sales increased 5 percent over last year, including increases of 2 percent in Personal Care, 5 percent in Consumer Tissue and 12 percent in K-C Professional. Outside North America, organic sales were up 4 percent in developing and emerging (D&E) markets and 10 percent in developed markets (Australia, South Korea and Western/Central Europe). Gross margin improved by 340 basis points to 33.2 percent, with higher net revenue realization and cost savings offsetting higher input costs of $160 million. First quarter operating profit was $787 million compared to $693 million last year, resulting in an operating margin of 15.1 percent, an increase of 150 basis points. On an adjusted basis, operating profit increased by 25 percent, driven by higher gross profit including $105 million in FORCE (Focus on Reducing Costs Everywhere) savings, offset by planned marketing, research and general expenses. Inflation increased input costs by $160 million this quarter, driven primarily by fiber and energy costs. Unfavorable currency effects impacted operating profit by $75 million during the quarter. Operating margin of 15.1 percent increased 280 basis points over adjusted operating margin last year. Net interest expense was $66 million, an increase of 5 percent over the prior year due to higher weighted average interest rate on outstanding debt. First quarter effective tax rate was 24.5 percent compared to reported rate of 18.2 percent and an adjusted rate of 21.0 percent last year due to benefits of certain tax planning initiatives. Net income of equity companies was $43 million compared to $23 million last year driven by Kimberly-Clark de Mexico. EPS increased 8 percent to $1.67 per diluted share on a reported basis and increased 24 percent on an adjusted basis, driven by the 25 percent increase in operating profit versus adjusted results last year. Personal Care Segment Personal Care sales of $2.7 billion decreased 1 percent, while organic sales increased 3 percent, driven by price and mix, partially offset by lower volume. Organic sales included a 1 percentage point impact from the exit of a private label contract. Successful revenue growth management and commercial execution contributed to favorable trends in net revenue realization and better-than-expected elasticities. First quarter operating profit of $487 million increased 3 percent, with organic growth and cost savings partially offset by input cost inflation, higher marketing, research and general expenses and an unfavorable impact from foreign currency. Consumer Tissue Segment Consumer Tissue sales of $1.6 billion increased 4 percent, including organic growth of 7 percent, driven by price partially offset by volume. The segment posted organic growth across all major regions. Successful revenue growth management and improving service levels contributed to top-line growth. First quarter operating profit of $240 million increased 40 percent, with organic growth and cost savings partially offset by input cost inflation, other manufacturing costs and higher marketing, research and general expenses. K-C Professional (KCP) Segment KCP sales of $847 million increased 9 percent, including organic growth of 11 percent, driven by price and mix partially offset by volume. The segment posted organic growth across key categories and regions. Strong revenue growth management contributed to healthy top-line results. First quarter operating profit of $159 million increased 77 percent, driven by continued focus on cost discipline and profitable growth. Cash Flow and Balance Sheet Cash provided by operations was $613 million compared to $204 million last year, driven by the increase in operating profit and improvements in working capital. Capital spending was $201 million compared to $253 million last year. The company completed share repurchases of 265 thousand shares at a cost of $34 million during the quarter. Total debt was $8.5 billion compared to $8.4 billion at the end of 2022. |
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