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Kimberly-Clark Announces Second Quarter 2024 Results and Raises 2024 Outlook
Kimberly-Clark Corporation has reported second quarter 2024 results characterized by positive volume and mix gains driven by pioneering, innovative new products, leveraging continued productivity momentum for strong earnings growth versus the prior-year period. "I am very proud of how our teams around the world have advanced our new operating model and delivered high-quality, top and bottom-line results in the first half of this year. We have made strong progress while navigating dynamic consumer and retail environments," said Kimberly-Clark Chairman and CEO Mike Hsu. "We have a strong foundation that we can leverage to accelerate investments across the enterprise. Our focus is to deliver high-quality consumer solutions at every price point, increase our operational scale, and enhance our long-term potential. We're excited about our opportunities to capitalize on our momentum to deliver our enduring goal of enhancing value for all our stakeholders." Quarter Highlights
Second Quarter 2024 Results Second quarter sales of $5.0 billion were 2 percent lower than the prior-year period, including negative impacts of approximately 5 percent from foreign currency translation and approximately 1 percent from the divestiture of the Tissue and K-C Professional business in Brazil in June 2023. Organic sales increased 4 percent, driven by a 2 percent increase in price and a 2 percent increase through a combination of volume and mix. Price-led gains reflected necessary pricing actions to address higher local costs in hyperinflationary economies, mainly in Argentina. Volume and mix were positive across North America, Developing and Emerging (D&E) markets, as well as Developed Markets (representing Australia, South Korea and Western/Central Europe). In North America, organic sales increased 1 percent versus the prior year, driven by 5 percent growth in Personal Care, partially offset by a decline of 4 percent in K-C Professional and 2 percent in Consumer Tissue. In D&E markets, organic sales rose 12 percent reflecting both pricing gains as well as volume and mix gains. Organic sales for Developed Markets were 3 percent lower, driven by lower pricing that primarily reflected comparisons with temporary, energy surcharge-related price increases in Western Europe in the prior-year period. Second quarter operating profit was $655 million, including $190 million of costs related to the company's 2024 Transformation Initiative. Adjusted operating profit increased by 16 percent despite an unfavorable impact of 7 percentage points from currency translation that was primarily driven by hyperinflationary economies. Excluding currency impacts, growth in adjusted operating profit was driven by a combination of organic growth, gross productivity gains that were partially offset by input cost inflation, primarily in D&E markets, supply chain related investments, and planned increases in marketing, research and general expenses. Net interest expense was $63 million versus $67 million in the prior-year period. The second quarter effective tax rate was 15.1 percent. On an adjusted basis, the effective rate in the second quarter was 20.9 percent compared to 20.5 percent in the prior year. Net income of equity companies was $63 million compared to $50 million last year driven by greater income from Kimberly-Clark de Mexico. Diluted EPS was $1.61 on a reported basis and included a negative $0.35 impact from costs related to the company's transformation initiatives. On an adjusted basis, EPS increased 19 percent to $1.96, driven primarily by the 16 percent increase in adjusted operating profit, aided by lower net interest and higher equity income. Year-To-Date Results For the first half of the year, sales of $10.2 billion decreased 1 percent including negative impacts of approximately 5 percent from foreign currency translation and approximately 1 percent impact of the exit of the tissue and K-C Professional business in Brazil. Organic sales grew 5 percent, driven by an approximately 3 percent increase in price, primarily in hyperinflationary markets, 1 percent from favorable product mix and 1 percent increase in volume. Year-to-date operating profit was $1.5 billion, including $235 million of costs related to the company's transformation initiative. Year-to-date adjusted operating profit was $1.7 billion in 2024 versus $1.5 billion in 2023. This was an increase of 15 percent versus prior year including an unfavorable impact of 9 percentage points from currency translation, primarily driven by hyperinflationary economies. Excluding currency impacts, the growth in adjusted operating profit was driven by a combination of organic growth and strong productivity savings that were partially offset by input cost inflation, primarily in D&E markets, supply chain related investments, and planned increases in marketing, research and general expenses. Through the first half of the year, diluted earnings per share were $3.52 in 2024 compared to $1.97 last year. Year-to-date adjusted earnings per share were $3.97 compared to $3.32 last year. Personal Care sales of $2.7 billion were in line with the year-ago period, while organic sales increased 8 percent from a combination of pricing actions in hyperinflationary economies as well as volume and mix gains. Innovation, solid commercial execution and supply improvements contributed to volume growth, led by a 4 percent increase in North America and a 2 percent increase in D&E markets that was partially offset by 1 percent decline in Developed Markets. Second quarter operating profit of $540 million increased 14 percent driven by favorable volume and mix, pricing net of cost inflation, and productivity, partially offset by investments in product quality and advertising as well as unfavorable currency. Consumer Tissue Segment Consumer Tissue sales of $1.5 billion decreased 4 percent, including impacts from divestitures and business exits of 2 percent and decline in organic sales of 2 percent. Organic decline was driven by retailer inventory reductions in North America as well as expected lower pricing in Western Europe due to lapping of temporary pricing related to energy surcharges in the prior year period. Second quarter operating profit of $245 million increased 23 percent, by strong productivity gains in current year and a better balance of pricing relative to costs compared to the prior year. K-C Professional (KCP) Segment KCP sales of $841 million decreased 5 percent due to divestitures and business exits as well as unfavorable currency impacts. Organic sales were in line with the year-ago period with 1 percent favorable mix offset by 1 percent unfavorable price impact primarily driven by lapping of energy surcharges in Western Europe. Second quarter operating profit of $186 million decreased 1 percent as productivity gains were offset by manufacturing cost headwinds and unfavorable price net of cost inflation in the quarter. Cash Flow and Balance Sheet Year-to-date cash provided by operations was $1.5 billion compared to $1.4 billion last year driven primarily by stronger operating results. Year-to-date capital spending was $352 million compared to $389 million last year. The company returned $965 million to shareholders through dividends and repurchases of common stock. Total debt was $8.0 billion as of June 30, 2024, consistent with December 31, 2023, levels. 2024 Outlook Based on its first half results, the company has updated its 2024 outlook, with all factors compared to 2023, as follows: Organic Net Sales are still expected to grow at mid-single digit rate while Reported Net Sales are still expected to be negatively impacted by 400 basis points of currency translation and 120 basis points from divestitures. Adjusted Operating Profit is now expected to grow at a mid-to-high teens percentage rate on a constant-currency basis. This is up from previous expectations for low-teen Adjusted Operating Profit growth on a constant currency basis. Adjusted Earnings Per Share is now expected to grow at a mid-to-high teens percentage rate on a constant-currency basis, an increase from previous expectations of low-teens growth. Reported Operating Profit and Reported Earnings Per Share are still expected to be negatively impacted by approximately 700 basis points from currency translation. This outlook reflects assumptions subject to change given the macro environment. Supplemental Materials and Live Webcast Supplemental materials will be available at approximately 6:30 a.m. Eastern Daylight Time in the Investor Relations section of www.kimberly-clark.com. The company will host a live Q&A session with investors and analysts on July 23, 2024, at 8:00 a.m. Eastern Daylight Time. The supplemental materials and Kimberly-Clark's Q&A session can be accessed at investor.kimberly-clark.com. A replay of the webcast will be available following the event through the same website. |
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