Financial Reports & Markets
Kimberly-Clark shares year-end results for 2022 and outlook for 2023
January 26, 2023 By Sukanya Ray Ghosh
Kimberly-Clark reported its year-end 2022 results and provided its 2023 outlook.
Highlights from the results include:
- Fourth quarter 2022 net sales of $5 billion, even with the year-ago period, including organic sales growth of five percent. Full-year 2022 net sales of $20.2 billion increased four percent, with organic sales up seven percent.
- Diluted net income per share for the fourth quarter was $1.50 in 2022 and $1.06 in 2021. Full-year diluted net income per share was $5.72 in 2022 and $5.35 in 2021.
- Fourth quarter adjusted earnings per share were $1.54 in 2022, up 18 percent compared to $1.30 in 2021. Adjusted earnings per share exclude certain items described later in this news release.
- Full-year adjusted earnings per share were $5.63 in 2022, down nine percent compared to $6.18 in 2021.
- Net sales in 2023 are expected to increase zero to two percent, including organic sales growth of two to four percent. Diluted earnings per share is expected to increase two to six percent, driven by an operating profit increase in the mid-to-high single digits, both versus adjusted results in 2022.
- The company’s board of directors has approved a 1.7 percent increase in the quarterly dividend, the 51st consecutive annual increase.
“Kimberly-Clark delivered seven percent organic growth in 2022 and an average of four percent organic growth on a three-year basis,” said company chairman and CEO Mike Hsu. “Our growth strategy is working with the support of excellent execution by our teams around the world and investments in our strong brands and commercial capabilities.”
Hsu added, “I’m especially proud of how our teams navigated in what continues to be a dynamic operating environment. We mitigated inflationary pressures with successful revenue growth management initiatives and maintained cost discipline while continuing to invest in our business.”
“In 2022, we also marked Kimberly-Clark’s 150th anniversary – a significant milestone for the company. We’re proud of our heritage of category defining innovation rooted in providing care for our consumers. As we look to the future, we will continue to drive our strategy to deliver profitable growth for long-term value creation as we fulfill our purpose of Better Care for a Better World.”
Consumer tissue segment
Fourth quarter sales of $1.6 billion was even with year-ago with organic sales up five percent. Net selling prices increased sales 11 percent while volumes declined six percent. Changes in foreign currency exchange rates reduced sales five percent. Fourth quarter operating profit of $239 million increased 19 percent. Results benefited from higher net selling prices and cost savings. The comparison was impacted by input cost inflation, lower volumes and the associated fixed cost under absorption, as well as unfavourable foreign currency effects.
Sales in North America increased two percent. Net selling prices rose eight percent while volumes declined six percent.
Sales in D&E markets decreased one percent. Changes in foreign currency exchange rates decreased sales six percent. Net selling prices rose 13 percent and product mix improved one point, while volumes were down nine percent.
Sales in developed markets outside North America decreased three percent. Changes in foreign currency exchange rates decreased sales 14 percent. Net selling prices rose approximately 16 percent, with strong pricing gains across all markets, while volumes declined five points.
Full year 2022 results
Sales of $20.2 billion increased four percent. Organic sales increased seven percent, as net selling prices rose nine percent, product mix increased sales one point and volumes declined three percent. Changes in foreign currency exchange rates decreased sales by approximately four percent.
Operating profit was $2,681 million in 2022 and $2,561 million in 2021. Results in 2022 include the net benefit of the acquisition of a controlling interest of Thinx and 2021 results include charges related to the 2018 Global Restructuring Program.
Adjusted operating profit was $2,617 million in 2022 and $2,836 million in 2021. Results were impacted by $1.5 billion of higher input costs, higher marketing, research and general spending and unfavourable foreign currency effects. Results benefited from organic sales growth and $290 million of FORCE savings.
Diluted net income per share was $5.72 in 2022 and $5.35 in 2021. Adjusted earnings per share of $5.63 decreased nine percent compared to $6.18 in 2021.
2023 outlook and key planning assumptions
The company issued key planning and guidance assumptions for full-year 2023. The outlook reflects assumptions subject to change given the volatility in the macro environment. This outlook does not reflect the impact of the sale of the company’s Brazil tissue business which is pending customary conditions and regulatory approval.
- Net sales increase zero to two percent.
- Organic sales growth of two to four percent.
- Foreign currency exchange rates unfavourable approximately two percent.
- Operating profit up mid-to-high single digits versus adjusted operating profit in 2022.
- Cost savings associated with FORCE program in-line with the prior year.
- Input costs expected to increase $200 to $300 million.
- Foreign currency exchange rates expected to reduce operating profit by low-double digits or approximately $300 to $400 million.
- Marketing, research and general spending expected to be up year-on-year driven by continued investment in the business, including higher advertising spending, as well as general inflation.
- Nonoperating expense expected to increase approximately $40 million versus adjusted non-operating expense in 2022, primarily related to interest rate driven employee postretirement benefit expense.
- Net interest expense expected to increase high-single digits year-over-year.
- Effective tax rate 23 to 25 percent.
- Net income from equity companies similar to prior year.
- Earnings per share increase two to six percent versus adjusted earnings per share in 2022.
- Capital spending of $800 to $900 million.
- The Board of Directors approved to increase the dividend by 1.7 percent to $1.18 per share, up from $1.16 per share in 2022. The first dividend will be payable on April 4, 2023 to stockholders of record on March 10, 2023.
- Share repurchases of $100 to $150 million, subject to market conditions.
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