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Kimberly-Clark shares results for second quarter of 2023

Kimberly-Clark Corporation reported its second quarter 2023 results.

“We delivered another quarter of strong organic sales growth and gross margin expansion,” said chairman and CEO Mike Hsu. “Our growth strategy is working, and given the strength of our first-half results, we’re raising our full-year outlook.”

Hsu added, “Continued improvement in gross margin positions us well to invest in superior brand value propositions, including innovation and digital leadership, which will help grow our market shares over time and deliver balanced and sustainable growth for long-term shareholder value.”

Quarter highlights

• Delivered net sales of $5.1 billion, up 1 percent, with organic sales growth of five percent.
• Gross margin was 33.7 percent, up 350 basis points; adjusted gross margin was 34.0 percent, up 380 basis points versus the prior year, driven by favourable net revenue realization and productivity, offsetting inflation.
• Diluted earnings per share were $0.30, primarily driven by $1.36 per share in non-cash charges for the impairment of intangible assets; on an adjusted basis, earnings per share were $1.65.
• Raised 2023 outlook for organic growth to three percent to five percent, and for adjusted earnings per share growth of 10 percent – 14 percent, with adjusted operating margin up 150 basis points at the midpoint versus last year.

Second quarter 2023 results

Second-quarter sales of $5.1 billion increased one percent, with organic sales up five percent, driven by a 9 percent increase in price and favourable product mix from ongoing revenue growth management programs, offset by a 3 percent decrease in volume. Changes in foreign currency exchange rates decreased sales by approximately four percent.

In North America, organic sales increased six percent over last year, including increases of one percent in Personal Care, seven percent in Consumer Tissue and 17 percent in K-C Professional. Outside North America, organic sales were up six percent in developing and emerging (D&E) markets and four percent in developed markets (Australia, South Korea and Western/Central Europe).

Gross margin improved by 350 bps to 33.7 percent and adjusted gross margin improved by 380 basis points to 34 percent, with higher net revenue realization and cost savings offsetting higher input costs of $30 million.

Second-quarter operating profit was $113 million compared to $621 million last year, resulting in an operating margin of 2.2 percent. On an adjusted basis, operating profit increased by 17 percent, driven by higher gross profit including $80 million in FORCE (Focus on Reducing Costs Everywhere) savings, offset by planned marketing, research and general expenses. Inflation increased input costs by $30 million this quarter. Unfavourable currency effects impacted operating profit by $100 million during the quarter. Adjusted operating margin of 14.2 percent increased 190 basis points over last year.

Consumer tissue segment
Consumer Tissue sales of $1.5 billion increased one percent, including organic growth of four percent, with gains from price partially offset by volume. Organic growth of seven percent in North America led the increase, with gains in both price and volume. Successful revenue growth management and improving service levels contributed to top-line growth.

Second-quarter operating profit of $200 million increased 12 percent, with organic growth and cost savings partially offset by input-cost inflation, higher other manufacturing costs and higher marketing, research and general expenses.