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Kimberly-Clark sees dip in adjusted earnings in Q3 2020 results


October 22, 2020
By P&PC Staff/Kimberly-Clark

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Kimberly-Clark

Kimberly-Clark Corporation has reported its third-quarter 2020 results, citing a dip in adjusted earnings but growth in net sales.

Third quarter adjusted earnings per share were $1.72 in 2020 compared to $1.84 in 2019.

Net sales were $4.7 billion, which increased one per cent compared to the year-ago period. Organic sales growth was at three per cent.

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Diluted net income per share for the third quarter was $1.38 in 2020 and $1.94 in 2019.

The company is now targeting full-year 2020 organic net sales growth of five per cent and adjusted earnings per share of $7.50 to $7.65. The prior outlook was for organic sales growth of four to five per cent and adjusted earnings per share of $7.40 to $7.60.

“Kimberly-Clark teams around the world are managing our near-term operating priorities extremely well, with strong focus on employee health and safety and supply chain excellence during this unprecedented time period,” says Mike Hsu, chairman and chief executive officer, in a statement.

“At the same time, we are significantly increasing our growth investments for future success, our market share positions are healthy overall and we are on track to achieve excellent financial results this year.”

“We delivered solid organic sales growth in the third quarter, with good underlying performance and increased demand because of COVID-19. We also achieved $140 million of cost savings and returned approximately $560 million to shareholders through dividends and share repurchases.

“While earnings in the quarter were down as expected, we’re raising our full-year outlook and now expect adjusted earnings per share will grow nine to 11 per cent this year. We continue to execute our strategies well and remain very optimistic about our opportunities to deliver balanced and sustainable growth and create long-term shareholder value.”

Third quarter 2020 operating results

Sales of $4.7 billion in the third quarter of 2020 increased one per cent compared to the year-ago period.

Organic sales increased three per cent, while changes in foreign currency exchange rates reduced sales two per cent.

Volumes rose two per cent and the combined impact of changes in net selling prices and product mix increased sales one per cent.

In North America, organic sales increased eight per cent in consumer products but fell 15 per cent in K-C Professional. Outside North America, organic sales rose two per cent in developing and emerging markets and three per cent in developed markets.

Third-quarter operating profit was $666 million in 2020 and $915 million in 2019. 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 $806 million in 2020 and $859 million in 2019. Results benefited from organic sales growth, $125 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program and $15 million of cost savings from the 2018 Global Restructuring Program. Input costs decreased $25 million, driven by pulp and other raw materials.

Consumer tissue segment

Third quarter sales of $1.6 billion increased nine per cent. Volumes increased 10 per cent and net selling prices rose slightly, while product mix was unfavourable by one per cent.

Changes in currency rates reduced sales slightly. The volume increase was driven by increased shipments in North America and developed markets to support higher consumer and customer demand related to the global outbreak of COVID-19.

Third-quarter operating profit of $318 million increased 20 per cent. Results benefited from organic sales growth, cost savings and lower input costs.

Sales in North America increased 11 per cent. Volumes rose 11 per cent and net selling prices improved two per cent, while product mix was down two per cent. Volumes increased high-single digits to low-double digits in all major product categories.

Sales in developing and emerging markets decreased four percent including a seven point negative impact from changes in currency rates. Volumes rose three per cent and product mix improved two per cent, while net selling prices fell two per cent.

Sales in developed markets outside North America increased 17 per cent. Volumes rose 14 per cent, driven by South Korea and Western/Central Europe, while net selling prices fell one per cent. Changes in currency rates increased sales four per cent.

For the full Q3 2020 Kimberly-Clark financial report, click here.