Kimberly-Clark (KMB) Q1 Earnings Beat Estimates, Sales Up Y/Y

Kimberly-Clark Corporation KMB reported first-quarter 2022 results, with the bottom line declining year over year and beating the Zacks Consensus Estimate. The top line increased and beat the consensus mark. Sales increased across all the company’s reporting segments. Management also raised its net sales and organic sales view for 2022. That being said, a highly inflationary environment is raising concerns.

KimberlyClark Corporation Price and EPS Surprise

KimberlyClark Corporation price-eps-surprise | KimberlyClark Corporation Quote

Quarter in Detail

Adjusted earnings came in at $1.35 per share, surpassing the Zacks Consensus Estimate of $1.23. However, the bottom line declined 25% from $1.80 per share in the year-ago quarter.

Kimberly-Clark’s sales came in at $5,095 million, beating the Zacks Consensus Estimate of $4,917.3 million. The metric rose 7% year over year. Unfavorable foreign currency rates affected sales by 2%. Organic sales rose 10%, with net selling prices rising 6%, volumes growing 2% and product mix sales increasing 2 points.

In North America, organic sales in consumer products rose 13% year over year, while the same increased 5% in the K-C Professional segment. Outside North America, organic sales went up 10% in developing and emerging (D&E) markets. The metric rose 8% across the developed markets.

Adjusted operating profit came in at $629 million, down from $804 million in the year-ago quarter, thanks to a rise in input costs to the tune of $470 million. An increase in pulp and polymer-based materials, distribution and energy costs led to a rise in input costs. Escalated marketing, research and general expenses and unfavorable foreign currency also affected operating profit. These were somewhat offset by organic sales growth, lower other manufacturing costs and cost savings of $50 million from the FORCE (Focused On Reducing Costs Everywhere) program.

Segment Details

Personal Care: Sales of $2,729 million increased 11% year over year. Net selling prices improved 8%, volumes rose 3% and product mix increased 3 points. Unfavorable foreign currency rates hurt sales by nearly 2%. Sales advanced 16% in North America and 8% in D&E markets. The metric increased by 5% across developed markets outside North America, including Australia, South Korea and Western/Central Europe.

Consumer Tissue: Segment sales of $1,568 million rose 4% year over year. Net selling prices improved sales by 5% and volumes grew 2 points. Unfavorable currency rates reduced sales by 2%, while exited businesses related to the 2018 Global Restructuring Program hurt sales by 1%. Sales rose 9% in North America, while the metric increased 3% in D&E markets. The metric fell 5% in developed markets outside North America.

K-C Professional (KCP): Segment sales gained 4% to $780 million. Net selling prices improved 4% and product mix benefited sales by nearly 1 point. Changes in currency rates hurt sales by 2%. Sales grew 5% in North America, while the same increased 4% in D&E markets. The metric remained unchanged year over year in developed markets outside North America.

Other Financial Updates

The company ended the quarter with cash and cash equivalents of $493 million, long-term debt of $8,101 million and total stockholders’ equity of $854 million. Kimberly-Clark generated cash from operating activities of $204 million during the three months ended Mar 31, 2022. Management incurred capital expenditures of $253 million.

Kimberly-Clark repurchased 0.2 million shares for $27 million in the reported quarter.

Other Update

In the first quarter of 2021, Kimberly-Clark acquired a majority and controlling stake in Thinx Inc. — a well-known company in the reusable period and incontinence underwear category for $181 million. Management reports the consolidated results of operations for Thinx under its Personal Care unit.

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2022 Outlook

Net sales in 2022 are now expected to grow 2-4% year over year. The company had earlier expected the metric to grow 1-2% in 2022. Organic sales are now anticipated to increase 4-6%, up from previous guidance of 3-4% growth. Management projects net selling prices to be higher. Unfavorable foreign currency exchange rates are likely to hurt sales by roughly 2%. In addition, the recently concluded Thinx buyout will slightly increase sales.

Management expects adjusted operating profit to be down low to mid-single digits percent. Nevertheless, increased organic sales are likely to aid operating profit.

Key input costs are now estimated to escalate by $1.1-$1.3 billion. Earlier, the metric was likely to increase by $750-$900 million. Management expects costs to rise or remain escalated for most inputs like polymer-based materials and pulp as well as distribution and energy. The company still envisions 2022 earnings per share (EPS) of $5.60-$6.00.

The Zacks Rank #4 (Sell) stock has declined 9.6% in the past three months compared with the industry’s fall of 8.1%.

3 Hot Staple Bets

Some better-ranked stocks are Inter Parfums, Inc. IPAR, McCormick & Company MKC and Sysco Corporation SYY.

Inter Parfums develops, manufactures and distributes prestige perfumes and cosmetics. It currently carries a Zacks Rank #2 (Buy). Inter Parfums has a trailing four-quarter earnings surprise of 46.7%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for IPAR’s current financial year sales and EPS suggests growth of 12.5% and 10.9%, respectively, from the year-ago period’s figures.

McCormick is one of the leading manufacturers, marketers and distributors of spices, seasonings, specialty foods and flavors. It presently carries a Zacks Rank #2.

The Zacks Consensus Estimate for McCormick's current financial year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported figures. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.

Sysco, the marketer and distributor of food and related products, currently carries a Zacks #2. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.

The Zacks Consensus Estimate for Sysco’s current financial year sales and earnings suggests growth of 30.4% and 120.1%, respectively, from the corresponding year-ago period’s reported figures.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.