Kimberly-Clark Corporation KMB reported fourth-quarter 2021 results, with the top line increasing year over year and beating the Zacks Consensus Estimate. The bottom line declined from the year-ago quarter’s reported figure. However, earnings surpassed the consensus mark.
Quarter in Detail
Adjusted earnings came in at $1.30 per share, surpassing the Zacks Consensus Estimate of $1.28. The bottom line declined 23% from $1.69 per share in the year-ago quarter.
Kimberly-Clark’s sales came in at $4,965 million, beating the Zacks Consensus Estimate of $4,928.8 million. The metric advanced 3% year over year. Organic sales rose 3%, with net selling prices rising 2% and product mix sales increasing 1%.
KimberlyClark Corporation Price and EPS Surprise
KimberlyClark Corporation price-eps-surprise | KimberlyClark Corporation Quote
In North America, organic sales in consumer products remained flat year over year, while it grew 2% in the K-C Professional segment. Outside North America, organic sales went up 8% in developing and emerging (D&E) markets. The metric rose 2% across the developed markets.
Adjusted operating profit came in at $611 million, down from $767 million in the year-ago quarter, thanks to a rise in input costs to the tune of $530 million. An increase in pulp and polymer-based materials, distribution and energy costs led to a rise in input costs. The hikes were somewhat offset by organic sales growth, lower other manufacturing costs, reduced marketing, research and general expense as well as cost savings of $115 million and $35 million from the FORCE (Focused On Reducing Costs Everywhere) program and the 2018 Global Restructuring Program, respectively.
Personal Care: Sales of $2,632 million increased 12% year over year. Net selling prices improved 4%, volumes rose 5% and product mix increased 2 points. The net effect of the Softex Indonesia buyout and business exits related to the company’s 2018 Global Restructuring Program aided sales by nearly 1%. Sales advanced 12% in North America and 14% in D&E markets. The metric grew 5% across developed markets outside North America, including Australia, South Korea and Western/Central Europe.
Consumer Tissue: Segment sales of $1,559 million fell 10% year over year. Volumes fell 7%, reflecting tough comparison stemming from escalated shipments in North America in the year-ago quarter owing to a spike in demand amid the pandemic. Net selling prices inched down almost 1%. Sales fell 14% in North America, while the metric increased 3% in D&E markets. The metric fell 6% in developed markets outside North America.
K-C Professional (KCP): Segment sales gained 2% to $758 million. Volumes were down 2%. Net selling prices rose 4%. Sales grew 2% in North America, while it increased 5% in D&E markets. The metric dipped 1% in developed markets outside North America.
Other Financial Updates
The company ended the quarter with cash and cash equivalents of $270 million, long-term debt of $8,141 million and total stockholders’ equity of $737 million. Kimberly-Clark generated cash from operating activities of $1,062 million during the three months ended Dec 31, 2021. Management incurred capital expenditures of $273 million. In 2022, the company expects capital spending of $1,000-$1,100 million.
Kimberly-Clark repurchased 0.1 million shares for $7 million in the fourth quarter. In 2022, the company plans to buy back shares worth nearly $100 million. The company approved a quarterly dividend hike of 1.8%. The quarterly dividend will rise to $1.16 per share, up from $1.14 per share paid in 2021. The revised dividend will be paid on Apr 4, 2022, to stockholders of record as of Mar 4, 2022.
The company is on track with the 2018 Global Restructuring Program, which is focused on lowering its structural costs and improving financial flexibility. As part of this initiative, the company exited or divested some low-margin businesses that reflected about 1% of net sales and closed or sold 11 facilities. The program generated annual pre-tax cost savings of $560 million. Management expects cost savings from the FORCE program in the range of $300-$350 million in 2022.
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Net sales in 2022 are expected to grow 1-2% year over year. Organic sales are expected to increase 3-4%. Unfavorable foreign currency exchange rates are likely to hurt sales by roughly 2%.
Management expects operating profit to be down low to mid-single digits percent compared with 2021 adjusted operating profit. Key input costs are estimated to escalate $750-$900 million. Management expects costs to rise or remain escalated for most inputs like purchased raw materials as well as distribution and energy. The company envisions 2022 earnings per share of $5.60-$6.00.
The Zacks Rank #3 (Hold) stock has gained 8% in the past three months against the industry’s decline of 9%.
3 Solid Staple Picks
Some better-ranked consumer staple companies are The Estee Lauder Companies EL, Helen of Troy Limited HELE and United Natural Foods UNFI.
Helen of Troy, the developer and distributor of a portfolio of consumer products worldwide, currently sports a Zacks Rank #1 (Strong Buy). HELE has dropped 3% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helen of Troy’s current financial year’s sales and EPS suggests growth of 0.8% and 0.6%, respectively,from the year-ago reported figure. HELE has a trailing four-quarter earnings surprise of 19.1%, on average.
United Natural Foods, the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada, sports a Zacks Rank #1 at present. UNFI has declined 11.5% in the past three months.
The Zacks Consensus Estimate for United Natural Foods’ current financial year EPS and sales suggests growth of 8.8% and 5.1%, respectively, from the year-ago reported number. UNFI has a trailing four-quarter earnings surprise of 35.4%, on average.
The Estee Lauder Companies, manufacturing and selling skincare, makeup, fragrance and hair care products worldwide, currently carries a Zacks Rank #2 (Buy). EL has declined 9.6% in the past three months.
The Zacks Consensus Estimate for The Estee Lauder Companies’ current financial year sales suggests growth of 15.4% from the year-ago reported figure. EL has a trailing four-quarter earnings surprise of 37%, on average.
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