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Kimberly-Clark reports earnings up in Q4 and full-year 2019 results


January 23, 2020
By P&PC Staff

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Kimberly-Clark Corporation has reported its fourth-quarter and year-end 2019 results, citing spikes in adjusted earnings – up seven per cent for the quarter and four per cent for the year.

“Our fourth quarter results capped off a year of excellent progress at Kimberly-Clark,” says Mike Hsu, chairman and chief executive officer, in a statement. “For the full year of 2019, we delivered four per cent growth in organic sales and in adjusted earnings per share, both ahead of our original outlook for the year. We also achieved strong margin improvements, generated $425 million of cost savings and returned $2.2 billion to shareholders through dividends and share repurchases.

“Looking ahead, our plan for 2020 is to deliver top- and bottom-line growth consistent with our medium-term financial objectives while continuing to increase our growth investments and allocate capital in shareholder-friendly ways. We remain very optimistic about our opportunities to deliver balanced and sustainable growth and create long-term shareholder value.”

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Q4 2019 operating results

Sales of $4.6 billion in the fourth quarter of 2019 were even with the year-ago period. Changes in foreign currency exchange rates reduced sales by two per cent and business exits, in conjunction with the 2018 Global Restructuring Program, reduced sales slightly.

Organic sales increased three per cent. Net selling prices rose more than two per cent and product mix improved two per cent, while volumes fell one per cent. In North America, organic sales increased three per cent in both consumer products and in K-C Professional. Outside North America, organic sales rose three per cent in developing and emerging markets and one per cent in developed markets.

Fourth quarter operating profit was $751 million in 2019 and $639 million in 2018. Results in both periods include charges related to the 2018 Global Restructuring Program. Results in 2019 also include a gain on the sale of property associated with a former manufacturing facility that was closed as part of a past restructuring.

Fourth quarter adjusted operating profit was $826 million in 2019 and $742 million in 2018. Results benefited from higher net selling prices, improved product mix, $85 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program and $40 million of cost savings from the 2018 Global Restructuring Program.

Fourth quarter adjusted earnings per share were $1.71 in 2019, up seven per cent compared to $1.60 in 2018.

Input costs decreased $60 million, driven by pulp, while other manufacturing costs rose year-on-year. Selling, general and administrative costs were higher, including increased incentive compensation expense and investments to improve commercial capabilities. Advertising spending also increased year-on-year. Unfavourable foreign currency translation and transaction effects also impacted the comparison.

Consumer tissue segment

Fourth quarter sales of $1.5 billion increased one per cent. Net selling prices increased three percent, while volumes declined one per cent and changes in currency rates reduced sales one per cent. Fourth-quarter operating profit of $281 million increased 36 per cent. Results benefited from higher net selling prices, cost savings and lower input costs. The comparison was impacted by other manufacturing cost increases and increased selling, general and administrative costs.

Sales in North America increased four per cent. Net selling prices rose six per cent, while volumes fell three per cent.

Sales in developing and emerging markets decreased two per cent, including a two-point negative impact from changes in currency rates. Net selling prices improved one per cent, while volumes fell one per cent.

Sales in developed markets outside North America decreased two per cent. Changes in currency rates reduced sales two percent, while volumes improved two per cent.

Full-year 2019 results

Sales of $18.5 billion were even with the year-ago period. Changes in foreign currency exchange rates reduced sales by three per cent and business exits in conjunction with the 2018 Global Restructuring Program reduced sales slightly. Organic sales increased four per cent.

Net selling prices rose four per cent and product mix improved one per cent, while volumes fell one per cent. In North America, organic sales increased three per cent in both consumer products and in K-C Professional. Outside North America, organic sales rose six per cent in developing and emerging markets and one per cent in developed markets.

Operating profit was $2,991 million in 2019 and $2,229 million in 2018. Results in both periods include charges related to the 2018 Global Restructuring Program.

Adjusted operating profit was $3,281 million in 2019, up five per cent compared to $3,138 million in 2018. Results benefited from organic sales growth, $260 million of FORCE cost savings and $165 million of cost savings from the 2018 Global Restructuring Program. The comparison was impacted by unfavourable currency effects, $145 million of higher input costs, other manufacturing cost increases, increased advertising spending and higher selling, general and administrative costs.

Diluted net income per share was $6.24 in 2019 and $4.03 in 2018. Adjusted earnings per share of $6.89 in 2019 increased four per cent compared to $6.61 in 2018. Performance benefited from higher adjusted operating profit, increased net income from equity companies and a lower share count, partially offset by a higher adjusted effective tax rate.

Read the full Kimberly-Clark Corporation Q4 2019 and full-year 2019 results, including 2020 outlook.