Post Earnings Coverage as Kimberly-Clark Reports Sluggish Sales and Reduces Outlook

Upcoming AWS Coverage on Colgate-Palmolive Co. Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 1, 2016 / Active Wall St. announces its post-earnings coverage on Kimberly-Clark Corp. (NYSE: KMB). The company posted its financial results for the third quarter fiscal 2016 (Q3 FY16) on October 24, 2016. The consumer staples giant reported earnings that missed Wall Street’s expectations and cut FY16 guidance. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Kimberly-Clark’s competitors within the Personal Products space, Colgate-Palmolive Co. (NYSE: CL), reported its third quarter results on October 27th, 2016. AWS will be initiating a research report on Colgate-Palmolive in the coming days.

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

http://www.activewallst.com/registration-3/?symbol=KMB

http://www.activewallst.com/registration-3/?symbol=CL

Earnings Reviewed

For the quarter ended on September 30th, 2016, Kimberly-Clark reported net income of $550 million, or $1.52 per share, up from $517 million, or $0.88 per share, for the same period last year. Adjusted earnings totaled $1.52, which was below analysts’ estimates for $1.54 per share. During the reported quarter, revenue totaled $4.59 billion, down approximately 3% from $4.72 billion reported last year and below market estimates of $4.73 billion. Changes in foreign currency exchange rates reduced sales by more than 2%.

The company’s operating profit for Q3 2016 was $836 million and $779 million in Q3 2015. The year-over-year operating profit comparison included benefits from $105 million in cost savings from the company’s FORCE (Focused on Reducing Costs Everywhere) program and $15 million of savings from the 2014 Organization Restructuring. Kimberly-Clark’s share of net income of equity companies in Q3 2016 was $33 million in 2016 and $37 million in 2015.

Business Segment

During Q3 2016, Sales from Kimberly-Clark’s Personal Care segment dropped 2% to $2.3 billion. Volumes increased approximately 3% while net selling prices were off 1%. Sales for Personal Care segment in North America decreased 1%. Child care volumes rose to double-digits, with benefits from innovations and category growth. Huggies diaper and adult care volumes were down to low single-digits and mid-single digits, respectively, compared to double-digit growth in the year-ago period. Sales in developing and emerging markets fell 4%, including an 8 point drag from unfavorable currency rates. Volumes increased 4% with gains in China, Eastern Europe, and the Middle East/Africa, and declines in Argentina and Brazil. Sales in developed markets outside North America (Australia, South Korea and Western/Central Europe) increased 1%.

Kimberly-Clark’s Consumer Tissue segment reported Q3 2016 sales of $1.5 billion, down 4% in North America. Volumes were down 3% and product mix was unfavorable 1%. Sales in developing and emerging markets declined 4%, including a 4 point negative impact from currency rates. Sales in developed markets outside North America were also down by 4%, with currency rates unfavorable by 3% .

K-C Professional (KCP) segment reported Q3 2016 sales of $0.8 billion down 3%. Sales in North America grew 1% due to higher net selling prices. Sales in developing and emerging markets decreased 1%, including a 5 point impact from currency rates. Sales in developed markets outside North America were down 6%. Changes in currency rates reduced sales by 2%.

Cash Flow & Balance Sheet

Kimberly-Clark reported that cash provided by operations in Q3 2016 was $948 million, up 12% versus $849 million in the year-ago period, primarily due to improved working capital. Capital spending for the reported quarter was $185 million compared to $271 million in Q3 2015. During Q3 2016, the company repurchased 1.7 million shares at a cost of $225 million. The company now expects full-year share repurchases of $750 million (prior target $700 million to $800 million). Total debt was $7.6 billion as of September 30, 2016 versus $7.8 billion at the end of 2015.

Organization Restructuring

In October 2014, Kimberly-Clark initiated a restructuring program in order to improve organization efficiency and offset the impact of stranded overhead costs resulting from the spin-off of the company’s health care business. The restructuring is expected to be completed by the end of 2016, with total costs anticipated to be toward the high-end of the previously communicated range of $130 million to $160 million after tax. Cumulative pre-tax savings from the restructuring are expected to be toward the high-end of the previously communicated range of $120 million to $140 million by the end of 2017.

Guidance

For FY16, Kimberly-Clark expects organic sales growth to be 2% compared to the company’s prior expectation of growth at the low end of the 3% to 5% range. Adjusted earnings per share are expected to be in the range of $5.95 to $6.05 compared to the previous guidance band of $5.95 to $6.15.

Stock Performance

At the close of trading session on October 31st, 2016, Kimberly-Clark’s stock price declined 0.12% to end the day at $114.41. A total volume of 2.43 million shares were exchanged during the session, which was above the 3-month average volume of 1.70 million shares. The stock currently has a market cap of $41.00 billion. The company’s shares are trading a PE ratio of 20.81 and have a dividend yield of 3.22%.

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