Financial Reports & Markets
Kimberly-Clark reports strong sales in third quarter 2019 results
By Kimberly-Clark Corporation
By Kimberly-Clark Corporation
Kimberly-Clark Corporation has reported its third quarter 2019 results and raised its outlook for full-year 2019 organic sales growth and earnings per share.
Sales of $4.6 billion in the third quarter of 2019 increased more than one per cent compared to 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.
“We achieved strong improvements in organic sales, profit margins and earnings per share in the quarter,” says Mike Hsu, chief executive officer, in a release. “In addition, we continued to launch innovations, pursue our growth priorities and increase investments in our brands. We also generated $95 million of cost savings and returned approximately $570 million to shareholders through dividends and share repurchases.”
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 four per cent in consumer products and five per cent in K-C Professional. Outside North America, organic sales rose five per cent in developing and emerging markets and one per cent in developed markets.
Third quarter operating profit was $915 million in 2019 and $669 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 a manufacturing facility as part of the restructuring.
Third quarter adjusted operating profit was $859 million in 2019 and $798 million in 2018. Results benefited from higher net selling prices, $50 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program and $45 million of cost savings from the 2018 Global Restructuring Program. Input costs decreased $10 million, driven by lower raw material costs.
“I’m encouraged by the progress we’re making this year while we invest more for longer-term success,” said Hsu. “We continue to be optimistic about our opportunities to deliver balanced and sustainable growth through execution of K-C Strategy 2022.”
Advertising spending increased and selling, general and administrative costs were higher, including increased incentive compensation expense. Other manufacturing costs also rose year-on-year. Foreign currency translation effects reduced operating profit by $15 million and transaction effects also negatively impacted the comparison.
Consumer tissue segment
Third quarter sales of $1.5 billion increased one per cent. Net selling prices increased five per cent, while volumes declined two per cent and changes in currency rates reduced sales two per cent. Third quarter operating profit of $264 million increased 25 per cent. Results benefited from higher net selling prices, cost savings and lower input costs. The comparison was impacted by other manufacturing cost increases, lower volumes and increased selling, general and administrative costs.
Sales in North America increased three per cent compared to a five per cent decline in the year-ago period. Net selling prices rose eight per cent, while volumes fell four per cent and product mix was off one per cent.
Sales in developing and emerging markets increased one per cent. Net selling prices and product mix each improved one per cent, while currency rates were unfavourable by two per cent.
Sales in developed markets outside North America decreased four per cent, including a five-point negative impact from changes in currency rates. Net selling prices increased two per cent.
Read Kimberly-Clark’s full Q3 2019 financial report.