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Kimberly-Clark reports net sales up 2% in Q2 2021 results

Kimberly-Clark Corporation has posted its second quarter 2021 results, with net sales of $4.7 billion up two per cent over the year-ago period.

Organic sales declined three per cent.

Diluted net income per share for the second quarter was $1.19 in 2021 and $1.99 in 2020, while second-quarter adjusted earnings per share were $1.47 in 2021 compared to $2.20 in 2020.

The company is now targeting full-year 2021 organic sales decline of zero to two per cent and adjusted earnings per share of $6.65 to $6.90.

The prior outlook was for organic sales growth of zero to one per cent and adjusted earnings per share of $7.30 to $7.55. The updated earnings outlook reflects significantly higher input cost inflation and lower sales volumes, partially offset by additional cost savings and reduced discretionary spending, the company says.

“Our second quarter reflects continued pandemic-driven volatility,” says Mike Hsu, chair and chief executive officer of Kimberly-Clark North America.

“We are facing significantly higher input costs and a reversal in consumer tissue volumes from record growth in the year-ago period as consumers and retailers in North America continued to reduce home and retail inventory.

“While we look forward to a return to a more normalized environment, we have moved decisively to take pricing actions to mitigate inflationary headwinds and continue to prudently manage costs. We remain confident in our strategy and in our fundamental brand performance. Our personal care business is performing well, and we continue to improve our market positions in key markets and realize robust growth across developing and emerging markets.”

Second-quarter 2021 operating results

Sales of $4.7 billion in the second quarter of 2021 increased two per cent versus the prior year. Changes in foreign currency exchange rates increased sales three per cent and the net impact of the Softex Indonesia acquisition and exited businesses in conjunction with the 2018 Global Restructuring Program increased sales two per cent.

Organic sales decreased three per cent as volumes declined four per cent while the combined impact of changes in net selling prices and product mix increased sales approximately one per cent.

In North America, organic sales decreased 11 per cent in consumer products and four per cent in K-C Professional. Volumes in North America, particularly consumer tissue, were negatively impacted by consumer and retailer de-stocking following the stock up that occurred in prior periods related to the global outbreak of COVID-19. Outside North America, organic sales were up nine per cent in developing and emerging (D&E) markets and up one per cent in developed markets.

Second-quarter operating profit was $613 million in 2021 and $925 million in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program. Second-quarter adjusted operating profit was $676 million in 2021 and $1,012 million in 2020.

Results were impacted by lower sales volumes and $345 million of higher input costs, driven by pulp, other materials and distribution costs. Other manufacturing costs were higher, including inefficiencies from lower production volumes.

Results benefited from higher net selling prices, $115 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program, $30 million of cost savings from the 2018 Global Restructuring Program and lower marketing, research and general expense.

Consumer tissue segment

Second quarter sales of $1.4 billion decreased 13 per cent. Volumes declined 15 per cent while changes in currency rates increased sales about three per cent.

The volume decline was driven by reduced shipments in North America, reflecting category softness as retailers reduce inventory and consumers reduce at home usage and pantry levels following the stock up that occurred in prior periods related to the global outbreak of COVID-19.

Second quarter operating profit of $196 million decreased 54 per cent. 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, lower advertising spending and favourable currency effects.

Sales in North America decreased 26 per cent. Volumes fell 27 per cent and product mix was down two per cent, while net selling prices improved two per cent.

Sales in D&E markets increased nine per cent including a three-point favourable impact from changes in currency rates. Volumes rose three per cent and product mix improved one per cent, while net selling prices were down two per cent. The Softex Indonesia acquisition increased sales four per cent.

Sales in developed markets outside North America increased one per cent, including a 10 per cent benefit from changes in currency rates. Net selling prices were down six per cent, compared to very low promotion levels in the year-ago period, and volumes were down one per cent. Exited businesses related to the 2018 Global Restructuring program reduced sales two per cent.

Year-to-date results

For the first six months of 2021, sales of $9.5 billion decreased two per cent. Organic sales decreased five per cent, as volumes declined seven per cent and net selling prices and product mix each improved one per cent. Changes in foreign currency exchange rates increased sales by approximately two per cent and the net impact of the Softex Indonesia acquisition and business exits in conjunction with the 2018 Global Restructuring Program increased sales two per cent.

Year-to-date operating profit was $1,383 million in 2021 and $1,829 million in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program.

Year-to-date adjusted operating profit was $1,480 million in 2021 and $2,009 million in 2020. Results were impacted by lower sales volumes, higher input costs and elevated other manufacturing costs. Results benefited from higher net selling prices, $180 million of FORCE savings and $70 million of cost savings from the 2018 Global Restructuring Program.

Through six months, diluted net income per share was $2.92 in 2021 and $3.92 in 2020. Year-to-date adjusted earnings per share were $3.27 in 2021 and $4.34 in 2020.

To read the full Q2 2021 financial report from Kimberly-Clark, including personal care and K-C Professional segments, click here.