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Kimberly-Clark reports financial results for first quarter of 2024

Kimberly-Clark Corporation reported first quarter 2024 results, which are reportedly characterized by positive volume and mix gains driven by new products, leveraging continued productivity momentum for strong earnings growth versus the prior-year period.

“We delivered an encouraging set of first quarter results as we embark on this next chapter of growth for Kimberly-Clark,” said Kimberly-Clark chairman and CEO Mike Hsu. “I’m very thankful for the strong execution from our teams around the world who are making this happen.”

Hsu continued, “Our powerhouse pipeline of innovation drove sequentially stronger gains from volume-plus-mix. We continued our strong productivity momentum through our efforts to optimize our margin structure, and we are making good progress focusing our enterprise as we advance the implementation of our new operating model.  We’re excited about our opportunities to capitalize on this momentum on a global level, enabling us to deliver long-term value for our stakeholders.”

Quarter highlights include the following:

• Net sales of $5.1 billion were down one percent, with organic sales growth of six percent versus the prior year.
• Gross margin was 37.1 percent, up 390 basis points versus the prior year, driven by organic net sales growth and gross productivity gains.
• Diluted earnings per share were $1.91; adjusted earnings per share were $2.01, up 20 percent versus prior year including a $0.21 year-on-year headwind from currency translation.

First quarter sales of $5.1 billion were one percent lower than the prior-year period, including negative impacts of approximately five percent from foreign currency translation and approximately one percent from the divestiture of the Tissue and K-C Professional business in Brazil in June 2023. Organic sales were up six percent, driven by a four percent increase in price, a one percent favourable product mix and a one percent increase in volume. Price-led gains reflected necessary pricing actions to address higher local costs in hyperinflationary economies, mainly in Argentina. Volume and mix were positive across North America, Developing and Emerging (D&E) markets, as well as Developed Markets (represents Australia, South Korea and Western/Central Europe).

In North America, organic sales increased three percent versus last year, driven by two percent growth in Personal Care and six percent growth in Consumer Tissue, partially offset by a decline of one percent in K-C Professional.

In D&E markets, organic sales were up 15 percent reflecting both pricing gains as well as volume and mix gains. Organic sales for Developed Markets decreased two percent, driven by lower pricing that primarily reflected comparisons with temporary, energy surcharge-related price increases in Western Europe in the prior-year period.

Gross margin improved by 390 bps to 37.1 percent as organic growth, together with gross productivity gains, more than offset cost inflation, primarily in developing markets and supply chain-related investments.

First quarter operating profit was $853 million, including $45 million of costs related to the company’s transformation initiative, compared to $787 million last year. Adjusted operating profit increased by 14 percent despite an unfavourable impact of 12 percentage points from currency translation, primarily driven by hyperinflationary economies. Excluding currency impacts, growth in adjusted operating profit was driven by gross profit gains that were partially offset by planned increases in marketing, research and general expenses.

Net interest expense was $57 million versus $66 million in the prior-year period.

First quarter effective tax rate was 23.6 percent, compared to 24.5 percent prior year. On an adjusted basis, the effective rate in the first quarter was 23.6 percent.

Net income of equity companies was $61 million compared to $43 million last year driven by greater income from Kimberly-Clark de Mexico.

Diluted EPS increased 14 percent to $1.91 on a reported basis and included a negative $0.10 impact from costs related to the company’s transformation initiative. On an adjusted basis, EPS increased 20 percent to $2.01, driven primarily by the 14 percent increase in adjusted operating profit, aided by lower net interest, a lower effective tax rate, and higher equity income.

Consumer tissue segment

Consumer Tissue sales of $1.6 billion decreased by two percent due to divestitures and business exits while organic sales were in line with the year ago period. Organic growth of 6 percent in North America was primarily offset by expected lower pricing in Western Europe due to lapping of energy surcharges.

First-quarter operating profit of $290 million increased 21 percent, driven by the normalization of revenue realization and input cost levels versus the prior-year period as well as incremental gross productivity gains in the current quarter.

Personal care segment

Personal Care sales of $2.7 billion were in line with the year-ago period, while organic sales increased 10 percent, driven by pricing actions in hyperinflationary economies as well as volume and mix gains. Innovation, solid commercial execution and supply improvements contributed to volume growth, led by a four percent increase in D&E markets and a one percent increase in North America partially offset by two percent decline in Developed Markets.

First-quarter operating profit of $545 million increased 12 percent as strong organic growth and gross productivity savings were partially offset by cost inflation, primarily in developing and hyperinflationary markets, investments in marketing, research and general expenses, as well as unfavourable currency translation.