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Kimberly-Clark shares financial results for the third quarter of 2023

Kimberly-Clark Corporation has reported the results for the third quarter of 2023. Comparisons are made versus the prior year period unless otherwise noted by the company.

“We delivered another strong quarter, with organic growth across all segments and continued margin progress,” said Kimberly-Clark chairman and CEO Mike Hsu. “I’m proud of how our teams around the world are executing our growth strategy. Our innovation and commercial capabilities continue to enhance the value proposition of our brands, while strong execution of our revenue growth management and ongoing productivity programs enabled us to restore gross margin to pre-pandemic levels.”

Hsu added, “Based on our year-to-date performance, we have raised our full-year outlook. We’re confident that continued investments in our brands and commercial programs will deliver superior value to our consumers and balanced and sustainable growth for our shareholders.”

Quarter Highlights

• Delivered net sales of $5.1 billion USD, up two percent, with organic sales growth of five percent.
• Gross margin was 35.8 percent, up 530 basis points versus the prior year, driven by favourable net revenue realization and productivity.
• Diluted earnings per share were $1.73; adjusted earnings per share were $1.74, up 24 percent versus prior year.
• Raised 2023 outlook for organic growth to four to five percent, and for adjusted earnings per share growth of 15 to 17 percent, with adjusted operating margin up 170 basis points at the midpoint versus last year.

Third quarter sales of $5.1 billion increased by two percent, with organic sales up five percent, driven by a five percent increase in price from ongoing revenue growth management programs and a one percent favourable product mix, offset by a one percent decrease in volume. Changes in foreign currency exchange rates decreased sales by approximately two percent and the divestiture of its tissue and K-C Professional business in Brazil decreased sales by approximately one percent.

In North America, organic sales increased seven percent over last year, including increases of nine percent in Personal Care, four percent in Consumer Tissue and seven percent in K-C Professional.

Gross margin improved by 530 bps to 35.8 percent, with higher net revenue realization, cost savings and favourable input costs partially offset by unfavourable currency impacts and other manufacturing costs.

Third quarter operating profit was $774 million compared to $655 million last year, resulting in an operating margin of 15.1 percent. Operating profit increased by 18 percent, driven by higher gross profit including $90 million in FORCE (Focus on Reducing Costs Everywhere) savings and $75 million in lower input costs, partially offset by other manufacturing costs of $30 million, planned increases in marketing, research and general expenses, coupled with higher incentive compensation levels. Unfavourable currency effects impacted operating profit by $135 million during the quarter.

Consumer tissue segment
Consumer Tissue sales of $1.6 billion decreased one percent, including organic growth of two percent, with gains from price partially offset by volume. Organic growth of four percent in North America and 2 percent from developed markets drove the increase. Favourable revenue growth management and improving service levels contributed to top-line growth.

Third-quarter operating profit of $267 million increased 22 percent, with organic growth, lower input costs and cost savings partially offset by higher other manufacturing costs, higher marketing, research and general expenses, and an unfavourable impact from foreign currency.

Personal care segment
Personal Care sales of $2.7 billion increased three percent, while organic sales increased seven percent, driven by healthy contributions from price, mix and volume. Innovation, solid commercial execution and supply improvements contributed to volume growth, led by a six percent increase in North America.

Third-quarter operating profit of $502 million increased 19 percent, with organic growth, cost savings and input cost tailwinds partially offset by higher marketing, research and general expenses and an unfavourable impact from foreign currency.