| Archive/Subscribe | TAPPI.org | Advertise | TAPPI Press Catalog | February 2024 |
Kimberly-Clark Announces Full-Year 2023 Results And 2024 Outlook
Kimberly-Clark Corporation has reported fourth quarter and full-year 2023 results and provided its 2024 outlook. Comparisons are made versus the prior year period, unless otherwise noted. "We had a solid finish to 2023, delivering strong organic growth as well as cost and earnings recovery above our initial expectations," said Kimberly-Clark Chairman and CEO Mike Hsu. "Our fourth quarter results demonstrate topline momentum with more balanced growth across volume, mix and price led by strong Personal Care results. I'm proud of our team's outstanding execution, including enhancing the value proposition of our global brands through consumer-centric innovation and stronger, more integrated commercial capabilities." Hsu continued, "We enter 2024 having advanced the Company's strategic foundation and financial position, and with confidence this phase of cost recovery and supply chain stabilization is largely behind us. Moving forward, we will continue to invest in differentiating our brands and enhancing our capabilities while we maintain a disciplined cost structure in our next phase of growth. I'm confident we are positioned to accelerate and enhance the performance of our business and create meaningful shareholder value as we deliver our purpose of better care for a better world." The company intends to hold an Investor Day in late March to detail its strategic priorities and key initiatives underpinning its vision for the future. Quarter Highlights
Fourth Quarter 2023 Results Fourth quarter sales of $5.0 billion were in line with prior year, with organic sales up 3 percent, driven by a 2 percent increase in price from ongoing revenue growth management programs and a 1 percent favorable product mix, with volumes in line with the prior year period and volume trends improving for the fourth consecutive quarter. Changes in foreign currency exchange rates reduced sales by approximately 2 percent and the divestiture of the tissue and K-C Professional business in Brazil reduced sales by approximately 1 percent. In North America, organic sales increased 3 percent over last year, including increases of 5 percent in Personal Care and 3 percent in Consumer Tissue that were partially offset by a 3 percent decrease in K-C Professional. Outside North America, organic sales were up 5 percent in developing and emerging (D&E) markets. Organic sales in developed markets (Australia, South Korea and Western/Central Europe) grew 1 percent versus prior year. Gross margin improved by 210 basis points to 34.9 percent, with higher net revenue realization, cost savings and favorable input costs partially offset by unfavorable currency impacts and higher other manufacturing costs. Gross profit grew 7 percent including $50 million in FORCE (Focus on Reducing Costs Everywhere) savings and $50 million in lower input costs. Fourth quarter operating profit was $670 million compared to $712 million last year, resulting in an operating margin of 13.5 percent. Operating profit decreased by 6 percent, driven by currency impacts of $170 million that reflected a combination of currency translation, transactional currency costs, and net monetary position losses in hyperinflationary markets. Excluding this factor, an underlying increase in gross profit dollars was partially offset by planned increases in marketing, research and general expenses, coupled with higher incentive compensation levels. Net interest expense was $38 million, 45 percent lower than prior year driven by higher interest income. Fourth quarter effective tax rate was 25.2 percent, higher than 22.5 percent in the prior year. On an adjusted basis, the effective rate in the fourth quarter was 25.2 percent, compared to 22.6 percent in the prior year period. Net income of equity companies was $53 million compared to $35 million last year driven by Kimberly-Clark de Mexico. Diluted EPS was in line with prior year at $1.50 on a reported basis. On an adjusted basis, EPS decreased 2 percent to $1.51, driven by impact of hyperinflationary economies and higher taxes offset by gross profit expansion and net income of equity companies. Full-Year 2023 Results In 2023, sales of $20.4 billion increased 1 percent, with organic sales up 5 percent, driven by approximately 6 percent increase in price from ongoing revenue growth management programs and 1 percent from favorable product mix, offset by a 2 percent decrease in volume, with sequential improvements throughout the year. Changes in foreign currency exchange rates reduced sales by 3 percent, and the exit of its tissue and K-C Professional business in Brazil reduced sales by 1 percent. Gross margin improved by 360 basis points to 34.4 percent and adjusted gross margin improved by 370 basis points to 34.5 percent reflecting higher net revenue realization as well as cost savings from its FORCE program of $325 million more than offsetting higher input costs of $65 million and higher other manufacturing costs of $195 million. Full-year operating profit was $2.34 billion in 2023 versus $2.68 billion in 2022. Results included non-cash impairment charges on intangible assets that were partially offset by a net benefit from the Brazil divestiture in the second quarter 2023. Full-year adjusted operating profit was $2.96 billion in 2023 versus $2.62 billion in 2022. The increases from organic sales and benefits from productivity-led cost savings were partially offset by higher other manufacturing costs, input costs, and marketing, research and general expenses, and unfavorable impact from foreign currency. In 2023, diluted earnings per share were $5.21 compared to $5.72 last year. 2023 adjusted earnings per share were $6.57 compared to $5.63 last year. Personal Care Segment Personal Care sales of $2.6 billion increased 2 percent in the quarter, while organic sales increased 6 percent, driven by healthy contributions from price, mix and volume. Innovation, solid commercial execution and supply improvements contributed to volume growth, led by a 4 percent increase in North America. In 2023, Personal Care grew 1 percent with an organic sales increase of 5 percent with broad-based growth across regions. Fourth-quarter operating profit of $429 million increased 1 percent, with organic growth and cost savings partially offset by higher marketing, research and general expenses and an unfavorable impact from foreign currency. Operating profit for the year increased 6 percent to $1.9 billion. Consumer Tissue Segment Consumer Tissue sales of $1.5 billion decreased 1 percent in the quarter, while organic sales were in line with last year reflecting price gains of 1 percent offset by volume decrease of 1 percent. Organic results were led by 3 percent growth in North America and 1 percent growth in Developed Markets. Sequential improvement in volume trends were led by North America with an increase of 2 percent in the quarter. For the Full-year, Consumer Tissue sales were up 1 percent with an organic increase of 3 percent. Fourth-quarter operating profit of $269 million increased 13 percent driven by improved revenue realization, lower input costs, and cost savings that were partially offset by higher other manufacturing costs and an unfavorable impact from foreign currency. Operating profit for the year increased 21 percent to $976 million. K-C Professional (KCP) Segment KCP sales of $816 million decreased 3 percent in the quarter, with an organic decrease of 1 percent, while the 2-year average organic growth in Q4 was 8 percent. Improved product mix and revenue realization were offset by lower volumes. Strategic investments are driving elevated consumer experiences and healthy demand in the segment. For the full year, sales were up 5 percent driven by an organic increase of 7 percent. Fourth-quarter operating profit of $151 million decreased 7 percent reflecting greater investments to fuel growth as well as higher incentive compensation levels. Operating profit for the year increased 46 percent to $665 million. Cash Flow and Balance Sheet Full-year cash provided by operations was $3.5 billion compared to $2.7 billion last year. 2023 capital spending was $766 million compared to $876 million last year. The company returned $1.8 billion to shareholders through dividends and share repurchases. The company completed share repurchases of 1.8 million shares at a cost of $225 million in 2023. Total debt was $8.0 billion as of December 31, 2023 compared to $8.4 billion at the end of 2022. 2024 Outlook The company currently expects to deliver a low-to-mid single digit percentage increase in 2024 Organic Net Sales versus the prior year period, with growth in reported Net Sales forecast to reflect negative impacts of approximately 300 basis points from currency translation and 60 basis points from the Brazil Tissue divestiture. Adjusted Operating Profit is expected to grow at a high single-digit to low double-digit rate on a constant-currency basis and Adjusted Earnings Per share are expected to grow at a high single-digit rate on a constant-currency basis versus the prior year period. Reported growth in Operating Profit and Earnings Per Share are currently expected to be negatively impacted by approximately 400 basis points from currency translation. This outlook reflects assumptions subject to change given the macro environment. |
|
Print this Article