"In 2020, we grew organic sales 6 percent, with healthy underlying performance and increased demand because of COVID-19." – Mike Hsu, Chairman and CEO, Kimberly-Clark.
Jan. 25, 2021 - Kimberly-Clark Corporation (NYSE: KMB) today reported year-end 2020 results and provided its 2021 outlook.
Chairman and Chief Executive Officer Mike Hsu said, "In 2020, we grew organic sales 6 percent, with healthy underlying performance and increased demand because of COVID-19. We also significantly increased brand investments and improved our market share positions. In addition, we achieved $575 million of cost savings and returned $2.15 billion to shareholders through dividends and share repurchases.
Finally, we grew adjusted earnings per share 12 percent, well above our medium-term objective. I'm extremely proud of what our teams accomplished while staying relentlessly focused on employee health and safety and meeting the needs of our consumers during this unprecedented time period."
Hsu continued, "Going forward we will continue to execute K-C Strategy 2022. We expect to further improve our market positions by building on our current momentum and leveraging our enhanced commercial capabilities. At the same time, we will continue to operate with financial discipline. We expect more challenging category conditions and higher commodity costs in 2021. That said, we remain very optimistic about our strategies to deliver balanced and sustainable growth over time and create long-term shareholder value."
Sales of $4.8 billion in the fourth quarter of 2020 increased 6 percent compared to the year-ago period. Organic sales rose 5 percent and the Softex Indonesia acquisition increased sales by approximately 2 percent, while changes in foreign currency exchange rates reduced sales 1 percent. Net selling prices increased approximately 3 percent, volumes increased 2 percent and product mix was slightly favorable. In North America, organic sales increased 11 percent in consumer products but fell 7 percent in K-C Professional. Outside North America, organic sales rose 3 percent in developing and emerging (D&E) markets and 2 percent in developed markets.
Fourth quarter operating profit was $749 million in 2020 and $751 million in 2019. Results in both periods include charges related to the 2018 Global Restructuring Program. Results in 2020 also include Softex Indonesia acquisition-related costs and a benefit from the resolution of a business tax matter in Brazil. Results in 2019 also include a gain on the sale of property associated with a former manufacturing facility that was closed as part of a past restructuring.
Fourth quarter adjusted operating profit was $767 million in 2020 and $826 million in 2019. Results benefited from organic sales growth, $110 million of cost savings from the company's FORCE (Focused On Reducing Costs Everywhere) program and $25 million of cost savings from the 2018 Global Restructuring Program. Input costs increased $40 million and other manufacturing costs were higher, including costs related to COVID-19. Advertising spending increased significantly and general and administrative costs were higher, including incentive compensation expense and capability-building investments. Foreign currency transaction effects also negatively impacted the comparison.
The fourth quarter effective tax rate was 24.6 percent in 2020 and 17.2 percent in 2019. The fourth quarter adjusted effective tax rate was 22.2 percent in 2020 and 24.6 percent in 2019. The rate in 2020 benefited from certain planning initiatives.
Kimberly-Clark's share of net income of equity companies in the fourth quarter was $38 million in 2020 and $32 million in 2019. Results benefited from organic sales growth but were negatively impacted by unfavorable currency effects.
Cash provided by operations in the fourth quarter was $887 million in 2020 and $924 million in 2019. Full-year cash provided by operations was an all-time record $3,729 million in 2020 compared to $2,736 million in 2019. The increase was driven by improved working capital and higher earnings. Capital spending for the fourth quarter was $323 million in 2020 and $342 million in 2019. Full-year spending was $1,217 million in 2020 and $1,209 million in 2019.
Fourth quarter 2020 share repurchases were 1.7 million shares at a cost of $243 million, bringing full-year repurchases to 4.9 million shares at a cost of $700 million. Total debt was $8.4 billion at the end of 2020 and $7.7 billion at the end of 2019. The increase included incremental financing to fund the Softex Indonesia acquisition that closed on October 1, 2020.
Fourth quarter sales of $2.3 billion increased 5 percent. Volumes increased 3 percent and net selling prices and product mix each improved 1 percent. The Softex Indonesia acquisition increased sales 3 percent while changes in currency rates reduced sales by 3 percent. Fourth quarter operating profit of $401 million decreased 10 percent. Results were impacted by unfavorable currency effects, other manufacturing cost increases, higher advertising spending, increased general and administrative costs and input cost inflation. The comparison benefited from organic sales growth and cost savings.
Sales in North America increased 3 percent driven by baby and child care. Volumes increased 2 percent and net selling prices rose 1 percent.
Sales in D&E markets increased 7 percent. The Softex Indonesia acquisition increased sales by 8 percent while changes in currency rates reduced sales 9 percent. Volumes rose 4 percent, including increases in Brazil, China, Eastern Europe, India and South Africa. Product mix improved more than 2 percent and net selling prices increased 1 percent.
Sales in developed markets outside North America (Australia, South Korea and Western/Central Europe) increased 6 percent. Changes in currency rates increased sales 5 percent. Volumes rose 2 percent while the combined impact of changes in net selling prices and product mix reduced sales by 1 percent.
Fourth quarter sales of $1.7 billion increased 14 percent. Volumes increased 9 percent and net selling prices rose 6 percent, while product mix was unfavorable by 1 percent. The volume increase was driven by demand related to the outbreak of COVID-19 and the work from home environment. Fourth quarter operating profit of $337 million increased 20 percent. Results benefited from organic sales growth and cost savings. The comparison was impacted by other manufacturing cost increases, increased advertising spending, higher input costs and increased general and administrative costs.
Sales in North America increased 21 percent. Volumes rose 13 percent, with bathroom tissue and paper towels up double-digits and facial tissue up mid-single digits. Net selling prices improved 11 percent driven by lower promotion expense, while product mix was down 3 percent.
Sales in D&E markets decreased 2 percent including a 6 point negative impact from changes in currency rates. Volumes rose 3 percent and the Softex Indonesia acquisition increased sales by 2 percent.
Sales in developed markets outside North America increased 12 percent. Volumes increased 6 percent, driven by South Korea, and changes in currency rates increased sales 6 percent.
Fourth quarter sales of $0.7 billion decreased 9 percent. Volumes declined 13 percent, reflecting lower away from home demand and challenging business conditions following the outbreak of COVID-19. Net selling prices and product mix each improved 2 percent. Fourth quarter operating profit of $105 million decreased 38 percent. The comparison was impacted by lower volumes, other manufacturing cost increases, higher input costs, and increased general and administrative costs. Results benefited from favorable net selling prices and cost savings.
Sales in North America decreased 7 percent. Volumes were down 12 percent, while product mix improved 4 percent and net selling prices rose 1 percent. Sales were down significantly in washroom products but increased double-digits in wipers, safety and other products.
Sales in D&E markets decreased 21 percent including a 5 point negative impact from changes in currency rates. Volumes fell 16 percent, with significant declines in all major geographies, and product mix was down 4 percent. Net selling prices increased 5 percent.
Sales in developed markets outside North America were down 2 percent. Volumes decreased 11 percent, while net selling prices and product mix each improved 2 percent. Currency rates were favorable by 5 percent.
Kimberly-Clark's complete fourth quarter, full year 2020 results and 2021 outlook, can be found on the company's website: www.kimberly-clark.com.
Kimberly-Clark's (NYSE: KMB) portfolio of brands, include Huggies, Kleenex, Scott, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Neve, Plenitud, Viva and WypAll, hold No. 1 or No. 2 share positions in 80 countries. To learn more, visit: www.kimberly-clark.com
SOURCE: Kimberly-Clark Corporation
Paper Industry Newsletter
Stay on top of paper industry news
from around the world with
PaperAge's free weekly newsletter.
Delivered every Thursday.
Sign up today!