Post Earnings Coverage as Kimberly-Clark’s Earnings Outperformed Expectations

Upcoming AWS Coverage on Procter & Gamble Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 27, 2017 / Active Wall St. announces its post-earnings coverage on Kimberly-Clark Corp. (NYSE: KMB). The Company reported its first quarter fiscal 2017 results on April 24, 2017. The maker of Huggies diapers and Kleenex tissue reported a 5% increase in earnings. Register with us now for your free membership at:

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One of Kimberly-Clark’s competitors within the Personal Products space, The Procter & Gamble Co. (NYSE: PG), disclosed its Q3 earnings results on Wednesday, April 26, 2017. AWS will be initiating a research report on Procter & Gamble in the coming days.

Today, AWS is promoting its earnings coverage on KMB; touching on PG. Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended March 31, 2017, Kimberly-Clark’s sales of $4.483 billion were marginally higher compared to sales of $4.476 billion in Q1 2016. Changes in foreign currency exchange rates increased sales by 1%. The Company’s organic sales declined 1%, as net selling prices fell more than 1%, while volumes rose approximately 1%. Kimberly-Clark’s reported numbers came slightly below analysts’ consensus of $4.49 billion.

For Q1 2017, Kimberly-Clark’s operating profit was $834 million as compared to operating profit of $804 million in Q1 2016. The improvement in operating profit was attributed to $110 million in cost savings from the Company’s FORCE (Focused On Reducing Costs Everywhere) program, foreign currency translation effects increased operating profit by $10 million, and transaction effects also benefited the comparison. Results were impacted by lower net selling prices, along with $35 million of higher input costs, driven by increases in raw materials, energy, and distribution costs.

Kimberly-Clark reported Q1 2017 net income of $563.0 million, or $1.57 per share, up from $545.0 million, or $1.50 per share, last year. The Company’s earnings numbers exceeded Wall Street’s estimates of $1.54 per share.

Business Segment Results

For Q1 2017, Kimberly-Clark’s Personal Care segment’s sales increased 2% on a y-o-y basis to $2.25 billion. Changes in currency rates benefited sales by 2%. The segment’s volumes increased 2%, while net selling prices declined 2%. For the reported quarter, the segment’s operating profit increased 7% to $481 million.

During Q1 2017, Personal Care segment’s sales in North America decreased 1% due to lower volumes. Total volumes in infant and child care were off low-single digits, as a mid-single digit decline in Huggies diapers was partially offset by a mid-single digit increase in child care. Baby wipes volumes increased mid-single digits, while feminine care volumes were down mid-single digits. The segment’s sales in developing and emerging markets grew 9% on a y-o-y basis. Volumes increased 9%, including gains in China, Eastern Europe, and Latin America, led by Brazil.

Personal Care segment’s sales in developed markets outside North America (Australia, South Korea, and Western/Central Europe) decreased 8% despite a 1 point benefit from favorable currency rates. The segment’s net selling prices declined 5% and volumes fell 4%, with the changes coming mostly in South Korea.

Kimberly-Clark’s Consumer Tissue segment sales decreased 3% to $1.46 billion in Q1 2017. The division’s volumes fell 2% and net selling prices were off 1%. Consumer Tissue’s operating profit declined 2% to $275 million.

During Q1 2017, Consumer Tissue segment’s sales in North America decreased 6% as volumes were down approximately 7%, with decline mostly in bathroom tissue, including impacts from competitive activity and lower promotion shipments. The segment’s sales in developing and emerging markets increased 6% on a y-o-y basis. Consumer Tissue segment’s sales in developed markets outside North America decreased 2% in the reported quarter. The segment’s volumes improved 4%, primarily in Western/Central Europe, while the combined impact of changes in net selling prices and product mix lowered sales 2%.

For Q1 2017, Kimberly-Clark’s K-C Professional (KCP) segment’s sales of $768 million increased 1%. Changes in currency rates benefited sales 1%. Product mix was favorable by 1%, while net selling prices fell 1%. The segment’s operating profit decreased 3% to $146 million.

For the reported quarter, KCP segment’s sales in North America decreased 2% due to lower net selling prices. Overall volumes were even with the year-ago same period, as low-single digit declines in washroom and wiper products were offset by gains in other categories. The segment’s sales in developing and emerging markets increased 7% compared to the year earlier quarter. The combined impact of changes in net selling prices and product mix had boosted sales by 3%, while volumes were off by 1%.

Cash Flow and Balance Sheet

For Q1 2017, Kimberly-Clark’s cash provided by operations was $436 million compared to $553 million in Q1 2016. The decrease was driven by higher tax payments. The Company’s capital spending for the reported quarter was $215 million compared to $220 million in the prior year’s corresponding quarter. During Q1 2017, Kimberly-Clark’s share repurchases were 2.4 million shares at a cost of $300 million. The Company’s total debt was $7.8 billion at March 31, 2017 and $7.6 billion at the end of 2016.

Outlook and Key Planning Assumptions

For fiscal year 2017, Kimberly-Clark is forecasting net sales to grow in the range of 1% to 2%. The Company expects organic sales to grow 1% to 2%, driven by higher volumes. Net selling prices and product mix are expected to be similar, or down slightly on a y-o-y basis. Kimberly-Clark is expecting input cost inflation to be in the range of $150 million to $250 million compared to previous estimate of $50 million to $200 million.

Stock Performance

On Wednesday, April 26, 2017, Kimberly-Clark’s share price finished its trading session at $130.13, sliding 2.03%. A total volume of 2.14 million shares exchanged hands, which was higher than the 3 months average volume of 1.96 million shares. The stock has surged 7.45% and 16.01% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have rallied 14.86%. The stock is trading at a PE ratio of 21.74 and has a dividend yield of 2.98%.

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