On October 22, 2024, Kimberly-Clark Corp (KMB, Financial) released its 8-K filing detailing its third-quarter earnings. The company reported a net sales figure of $5.0 billion, which fell short of the analyst estimate of $5.109 billion. However, the adjusted earnings per share (EPS) of $1.83 surpassed the estimated EPS of $1.67, reflecting a 5% increase from the previous year.
Company Background
Kimberly-Clark Corp (KMB, Financial) is a leading manufacturer in the tissue and hygiene sector, with a diverse brand portfolio including Huggies, Pull-Ups, Kotex, Depend, Kleenex, and Cottonelle. The company also operates K-C Professional, which provides safety and sanitary solutions for workplaces. With over half of its sales generated in North America and more than 10% in Europe, Kimberly-Clark maintains a significant presence in Asia and Latin America as well.
Performance and Challenges
The company's Q3 2024 performance was marked by a 4% decline in net sales compared to the previous year, primarily due to a 3% negative impact from foreign currency translation and a 1% impact from the divestiture of the K-C Professional Personal Protective Equipment (PPE) business. Despite these challenges, Kimberly-Clark achieved a 1% organic sales growth, driven by a 1% increase in pricing, particularly in hyperinflationary economies like Argentina.
Financial Achievements
Kimberly-Clark's financial achievements in Q3 2024 include a reported gross margin of 36.0% and an adjusted gross margin of 36.7%, up 90 basis points from the previous year. The company's ability to manage costs effectively and improve productivity contributed to these results. The adjusted operating profit increased by 5%, despite a 4 percentage point negative impact from currency translation.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales | $4,952 million | $5,132 million | -4% |
| Gross Profit | $1,784 million | $1,838 million | -3% |
| Operating Profit | $1,154 million | $774 million | +49% |
| Net Income | $915 million | $591 million | +55% |
| Diluted EPS | $2.69 | $1.73 | +55% |
Analysis of Performance
Kimberly-Clark's performance in Q3 2024 highlights its resilience in a challenging economic environment. The company's strategic pricing actions and focus on productivity gains have helped offset the adverse effects of currency fluctuations and divestitures. The increase in adjusted EPS and operating profit underscores the effectiveness of its cost management and innovation strategies.
Additional Insights
Kimberly-Clark's year-to-date results show a 2% decrease in sales, with organic sales growth of 4%. The company has returned $2.0 billion to shareholders through dividends and stock repurchases, reflecting its commitment to shareholder value. Total debt decreased to $7.5 billion as of September 30, 2024, from $8.0 billion at the end of 2023, indicating improved financial health.
“Our third quarter results reflect strong execution across the business as we transform our organization,” said Kimberly-Clark Chairman and CEO, Mike Hsu. “I’m very proud of our teams' ability to deliver organic top-and-bottom-line growth, driven by market share gains and improved productivity, even against the backdrop of a dynamic consumer environment.”
Kimberly-Clark's strategic initiatives, including its Powering Care strategy, are expected to continue driving growth and operational efficiency, positioning the company well for future challenges and opportunities in the consumer packaged goods industry.
Explore the complete 8-K earnings release (here) from Kimberly-Clark Corp for further details.
