PaperAge logo

Kimberly-Clark Announces Third Quarter 2023 Results

Kimberly-Clark In the third quarter, Kimberly-Clark delivered net sales of $5.1 billion, up 2 percent, with organic sales growth of 5 percent.

Oct. 24, 2023 - Kimberly-Clark Corporation [on Oct. 24] reported third quarter 2023 results. Comparisons are made versus the prior year period, unless otherwise noted.

"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 continued, "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, up 2 percent, with organic sales growth of 5 percent.
  • Gross margin was 35.8 percent, up 530 basis points versus the prior year, driven by favorable 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 4% - 5%, and for adjusted earnings per share growth of 15% - 17%, with adjusted operating margin up 170 basis points at the midpoint versus last year.

Third Quarter 2023 Results

Third quarter sales of $5.1 billion increased 2 percent, with organic sales up 5 percent, driven by a 5 percent increase in price from ongoing revenue growth management programs and a 1 percent favorable product mix, offset by a 1 percent decrease in volume. Changes in foreign currency exchange rates decreased sales by approximately 2 percent and the divestiture of its tissue and K-C Professional business in Brazil decreased sales by approximately 1 percent.

In North America, organic sales increased 7 percent over last year, including increases of 9 percent in Personal Care, 4 percent in Consumer Tissue and 7 percent in K-C Professional. Outside North America, organic sales were up 5 percent in developing and emerging (D&E) markets. Organic sales for developed markets (Australia, South Korea and Western/Central Europe) were in line with year ago.

Gross margin improved by 530 bps to 35.8 percent, with higher net revenue realization, cost savings and favorable input costs partially offset by unfavorable 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. Unfavorable currency effects impacted operating profit by $135 million during the quarter.

Net interest expense was $56 million, 19 percent lower than prior year.

Third quarter effective tax rate was 22.5 percent broadly in line with prior year. On an adjusted basis, the effective rate in the third quarter was 22.5 percent, compared to 22.3 percent prior year. Net income of equity companies was $50 million compared to $29 million last year driven by Kimberly-Clark de Mexico.

Diluted EPS increased 25 percent to $1.73 on a reported basis. On an adjusted basis, EPS increased 24 percent to $1.74, driven primarily by the 18 percent increase in adjusted operating profit, in addition to gains in equity income.

Business Segment Net Sales Results

Personal Care Segment
Personal Care sales of $2.7 billion increased 3 percent, while organic sales increased 7 percent, driven by healthy contributions from price, mix and volume. Innovation, solid commercial execution and supply improvements contributed to volume growth, led by a 6 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 unfavorable impact from foreign currency.

Consumer Tissue Segment

Consumer Tissue sales of $1.6 billion decreased 1 percent, including organic growth of 2 percent, with gains from price partially offset by volume. Organic growth of 4 percent in North America and 2 percent from Developed Markets drove the increase. Favorable 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 unfavorable impact from foreign currency.

K-C Professional (KCP) Segment
KCP sales of $854 million increased 2 percent, including organic growth of 4 percent, driven by price and mix partially offset by volume. Strong revenue realization and share gains in North America were partly offset by lower volume due to the timing of price adjustments. Demand for its new solutions in the washroom business remains healthy.

Third-quarter operating profit of $168 million increased 41 percent, driven by continued focus on profitable growth and cost discipline.

Kimberly-Clark's (NYSE: KMB) portfolio of brands, including Huggies, Kleenex, Scott, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Plenitud, Sweety, Softex, Viva and WypAll, hold No. 1 or No. 2 share positions in approximately 80 countries.

SOURCE: Kimberly-Clark

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!