Kimberly-Clark Reports Mixed Q2 Earnings As Operating Income Plunges 82%, Raises Guidance

Kimberly-Clark Corp KMB reported second-quarter FY23 sales growth of 1% year-on-year to $5.1 billion, missing the analyst consensus estimate of $5.13 billion.

Organic sales increased by 5% driven by a 9% increase in price and favorable product mix from ongoing revenue growth management programs, offset by a 3% decrease in volume.

In North America, organic sales rose 7% in consumer Tissue, 17% in K-C Professional and 1% in Personal Care.

Adjusted EPS of $1.65 beat the analyst consensus of $1.48.

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Gross profit grew by 13% Y/Y to $1.73 billion, and the gross profit margin expanded 350 basis points to 33.7%.

Marketing, research, and general expenses increased 12% Y/Y to $1.01 billion.

Operating income plunged 82% to $113 million, with an operating margin of 2.2%.

Cash provided by operations year-to-date was $1.4 billion. The company held $580 million in cash and equivalents as of June 30, 2023.

Outlook: Kimberly-Clark raised FY23 organic sales growth from 2%-4% to 3%-5%. The Irving, Texas-based company raised FY23 EPS growth outlook from 6%-10% to 10%-14% increase versus FY22 adj EPS.

It also raised FY23 operating margin outlook from a 130 basis points increase to 150 basis points expansion.

It continues to see share repurchases of $100 million - $150 million, subject to market conditions.

Price Action: KMB shares are trading higher by 1.01% at $138.54 in premarket on the last check Tuesday.

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