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Kimberly-Clark announces third quarter results for 2021


November 17, 2021
By P&PC Staff/Kimberly-Clark

Topics

Kimberly-Clark recently announced its results for the third quarter.

Here are the highlights from the results:

  • Third quarter 2021 net sales of $5 billion increased seven percent compared to the year-ago period, with an organic sales increase of four percent.
  • Diluted net income per share for the third quarter was $1.39 in 2021 and $1.38 in 2020.
  • Third quarter adjusted earnings per share were $1.62 in 2021 compared to $1.72 in 2020. Adjusted earnings per share exclude certain items described later in this news release.
  • Diluted net income per share for 2021 is anticipated to be $5.15 to $5.60.
  • The company is now targeting full-year 2021 organic sales decline of one to two percent and adjusted earnings per share of $6.05 to $6.25. The prior outlook was for organic sales decline of zero to two percent and adjusted earnings per share of $6.65 to $6.90. The updated earnings outlook reflects significantly higher input cost inflation.

“Our third quarter results reflect a dynamic and challenging macro environment.  Our organic sales were strong, including double-digit growth in a number of our personal care markets, and improving performance in tissue and our professional business,” said Kimberly-Clark chairman and CEO Mike Hsu. “Market share performance also remained strong, demonstrating the strength of our innovation and excellent local commerical execution. Our earnings were negatively impacted by significant inflation and supply chain disruptions that increased our costs beyond what we anticipated.  We are taking further action, including additional pricing and enhanced cost management, to mitigate these headwinds as it is becoming clear they are not likely to be resolved quickly.”

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He further added, “We will continue to invest in our brands and capabilities as we navigate through this volatile and difficult macro environment.  Our strategy is working, and we remain confident in our future and our ability to create long-term shareholder value.”

Third quarter 2021 operating results

Sales of $5 billion in the third quarter of 2021 increased seven percent as compared to the same time in the previous year.  Changes in foreign currency exchange rates increased sales one percent and the net impact of the Softex Indonesia acquisition and exited businesses in conjunction with the 2018 Global Restructuring Program increased sales two percent.  Organic sales increased 4 percent as net selling prices rose 3 percent and product mix increased sales 1 percent.

In North America, organic sales increased 3 percent in consumer products and 16 percent in K-C Professional.  Outside North America, organic sales were up 6 percent in developing and emerging (D&E) markets and were even with year-ago in developed markets.

Third quarter operating profit was $657 million in 2021 and $666 million in 2020.  Results in both periods include charges related to the 2018 Global Restructuring Program.  Third quarter adjusted operating profit was $745 million in 2021 and $806 million in 2020.  Results were impacted by $480 million of higher input costs, driven by pulp and polymer-based materials, distribution and energy costs.  Results benefited from organic sales growth, $115 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program, $35 million of cost savings from the 2018 Global Restructuring Program and lower marketing, research and general expense.

The third quarter effective tax rate was 21.6 percent in 2021 and 20.1 percent in 2020.  The third quarter adjusted effective tax rate was 20.9 percent in 2021 and 22.4 percent in 2020.  Kimberly-Clark’s share of net income of equity companies in the third quarter was $21 million in 2021 and $31 million in 2020.

Personal Care Segment

Third quarter sales of $2.7 billion increased 14 percent.  The net impact of the Softex Indonesia acquisition and exited businesses in conjunction with the 2018 Global Restructuring Program increased sales approximately three percent while changes in currency rates increased sales by one percent.  Net selling prices increased four percent, volumes rose three percent and product mix improved two points.  Third quarter operating profit of $496 million increased two percent.  Results benefited from organic sales growth, cost savings and reduced marketing, research and general spending.  The comparison was impacted by input cost inflation.

Sales in North America increased 11 percent.  Net selling prices increased sales five percent, volumes rose four percent and product mix improved two points.  Changes in currency rates increased sales by one percent while exited business related to the 2018 Global Restructuring program reduced sales by one percent.

Sales in D&E markets increased 18 percent.  The Softex Indonesia acquisition increased sales by approximately 11 percent while changes in currency rates increased sales by one percent.  Net selling prices increased sales by four percent and product mix increased sales by three percent.  Organic sales increased in ArgentinaBrazilChinaEastern EuropeIndia and South Africa but declined in ASEAN and most of the rest of Latin America.

Sales in developed markets outside North America (AustraliaSouth Korea and Western/Central Europe) increased 11 percent including a four-point favourable impact from changes in currency rates.  Volumes rose five percent and net selling prices increased sales two percent.

Consumer Tissue Segment

Third quarter sales of $1.5 billion decreased five percent.  Changes in currency rates increased sales by one percent.  Volumes declined seven percent while net selling prices increased sales by one percent.  The volume comparison reflects elevated shipments in North America and developed markets in the year-ago period to support higher consumer and customer demand related to the global outbreak of COVID-19.  Third quarter operating profit of $222 million decreased 30 percent.  The comparison was impacted by lower organic sales, higher input costs and other manufacturing cost increases, including inefficiencies from lower production volumes.  Results benefited from cost savings and reduced marketing, research and general spending.

Sales in North America decreased eight percent.  Volumes fell eight percent and product mix was down by one percent, while net selling prices improved by one percent.

Sales in D&E markets increased five percent including a one point favourable impact from changes in currency rates.  Net selling prices rose three percent, product mix improved approximately 1 percent while volumes were down three percent. The Softex Indonesia acquisition increased sales by four percent.

Sales in developed markets outside North America decreased 6 percent.  Volumes were down six percent while net selling prices rose one percent.  Exited businesses related to the 2018 Global Restructuring program reduced sales four percent while change in currency rates increased sales by three percent.

Year-To-Date Results

For the first nine months of 2021, sales of $14.5 billion increased by one percent.  Organic sales decreased two percent as volumes declined five percent while net selling prices increased two percent and product mix improved one percent.  Changes in foreign currency exchange rates increased sales by approximately two percent and the net impact of the Softex Indonesia acquisition and business exits in conjunction with the 2018 Global Restructuring Program increased sales by two percent.

Year-to-date operating profit was $2,040 million in 2021 and $2,495 million in 2020.  Results in both periods include charges related to the 2018 Global Restructuring Program.  The year-to-date adjusted operating profit was $2,225 million in 2021 and $2,815 million in 2020. Results were impacted by lower sales volumes, $960 million of higher input costs and elevated other manufacturing costs.  Results benefited from higher net selling prices, $295 million of FORCE savings, $105 million of cost savings from the 2018 Global Restructuring Program and reduced marketing, research and general spending.

Through nine months, the diluted net income per share was $4.31 in 2021 and $5.30 in 2020.  Year-to-date adjusted earnings per share were $4.89 in 2021 and $6.06 in 2020.