Fourth quarter 2018 net sales of $4.6 billion decreased one per cent compared to the year-ago period. Changes in foreign currency exchange rates reduced sales by four per cent while organic sales increased three per cent. Full-year 2018 net sales of $18.5 billion rose one per cent, including organic sales growth of one per cent.
Diluted net income per share for the fourth quarter was $1.18 in 2018 and $1.75 in 2017. Full-year diluted net income per share was $4.03 in 2018 and $6.40 in 2017.
Fourth quarter adjusted earnings per share were $1.60 in 2018 and $1.57 in 2017.
Full-year adjusted earnings per share were $6.61 in 2018, up six per cent compared to $6.23 in 2017. The company's previous guidance was for earnings of $6.60 to $6.80.
Net sales in 2019 are expected to decrease between one and two per cent, including a three to four per cent negative impact from changes in foreign currency exchange rates. Organic sales are expected to increase two per cent.
Kimberly-Clark Corporation is also introducing its K-C Strategy 2022 strategic plan and associated financial objectives as it looks ahead to its 150-year anniversary in 2022. The plan is focused on delivering balanced and sustainable growth over the next several years.
"In 2018, we returned to delivering organic sales growth and we continued to launch innovations, pursue our growth priorities and invest in our brands," says Mike Hsu, chief executive officer. "Overall, it was a challenging macro environment and our margins declined, reflecting significant commodity inflation and currency volatility. Nonetheless, I'm encouraged that in response to these headwinds we achieved higher selling prices in the second half of the year. We also achieved $510 million of cost savings, generated strong cash flow and returned $2.2 billion to shareholders through dividends and share repurchases."
As part of the strategic plan:
- The company will target to grow sales in-line with, or slightly ahead of, category growth rates. Kimberly-Clark's three growth pillars are to elevate core businesses, accelerate growth in D&E markets and drive digital marketing and e-commerce. The company expects to achieve these pillars by launching differentiated product innovations, driving category development and leveraging commercial capabilities in sales and marketing.
- The company will generate savings in order to fund growth initiatives and improve margins. Focus areas will include driving ongoing supply chain productivity improvements through the FORCE program, executing the 2018 Global Restructuring Program, rigorously controlling discretionary spending to sustain the company's top-tier overhead cost structure and driving further improvement in working capital.
- The company will allocate capital in value-creating ways, enabled by strong cash generation. Kimberly-Clark expects to spend capital at an annual rate of four to five per cent of net sales after completing the 2018 Global Restructuring Program. In addition, the company plans to return significant amounts of cash to shareholders through dividends and share repurchases.