Why Huggies Maker Kimberly-Clark Shares Are Sinking Today

Kimberly-Clark Corp KMB shares are trading lower after the company reported fourth-quarter FY23 results.

Sales remained flat Y/Y at $4.97 billion, missing the consensus estimate of $4.98 billion. Organic sales increased by 3%, driven by a 2% increase in price and a 1% favorable product mix, with volumes at par with the prior year.

In North America, organic sales rose 5% in Personal Care and 3% in Consumer Tissue but fell 3% in K-C Professional. 

Gross margin expanded 210 bps Y/Y to 34.9%, led by higher net revenue realization, cost savings, and favorable input costs.

Operating income fell 6% Y/Y to $670 million, with an operating margin of 13.5%.

Adjusted EPS of $1.51 missed the analyst consensus of $1.54.

In 2023, the company completed share repurchases worth $225 million. Full-year operating cash flow was $3.5 billion. The company held $1.09 billion in cash and cash equivalents as of December 31, 2023.

Mike Hsu, Chairman and CEO, said, “We enter 2024 having advanced the Company’s strategic foundation and financial position, and with confidence this phase of cost recovery and supply chain stabilization is largely behind us. Moving forward, we will continue to invest in differentiating our brands and enhancing our capabilities while we maintain a disciplined cost structure in our next phase of growth.”

Kimberly-Clark increased its quarterly dividend payout by 3.4% to $1.22 per share. The dividend is payable on April 2, 2024, to stockholders of record as of March 8, 2024.

Outlook: Kimberly-Clark expects to deliver a low-to-mid single digit percentage increase in 2024 organic net sales, with reported net sales growth reflecting negative impacts of around 300 basis points from currency translation and 60 basis points from the Brazil Tissue divestiture. 

The company expects adjusted operating profit to grow at a high single-digit to low double-digit rate on a constant-currency basis and adjusted EPS to grow at a high single-digit rate on a constant-currency basis.

The currency translation is anticipated to impact reported EPS and operating profit by 400bps.

The company intends to hold an Investor Day in late March to detail its strategic priorities and key initiatives.

Price Action: KMB shares are trading lower by 4.57% at $119.24 on the last check Wednesday.

Photo via Wikimedia Commons