Kimberly-Clark Announces First Quarter 2018 Results

Kimberly-Clark Corporation (NYSE: KMB) today reported first quarter 2018 results.

Executive Summary
◦First quarter 2018 net sales of $4.7 billion increased 5 percent compared to the year-ago period. Changes in foreign currency exchange rates benefited sales by 3 percent. Organic sales rose 2 percent, including 3 percent growth in North American consumer products.
◦Diluted net income per share for the first quarter of 2018 was $0.26, including significant charges related to the company’s previously announced 2018 Global Restructuring Program.
◦First quarter adjusted earnings per share were $1.71 in 2018, an increase of 9 percent compared to diluted net income per share of $1.57 in 2017. Adjusted earnings per share exclude certain items described later in this news release.
◦Diluted net income per share for 2018 is anticipated to be $3.67 to $4.27.
◦The company continues to target full-year 2018 organic sales growth of approximately 1 percent and adjusted earnings per share of $6.90 to $7.20, a year-on-year increase of 11 to 16 percent.

Chairman and Chief Executive Officer Thomas J. Falk said, “I’m encouraged by the 2 percent organic sales growth we delivered in the first quarter, led by improved performance in North America. We also generated $90 million of cost savings, reduced discretionary spending and returned approximately $550 million to shareholders through dividends and share repurchases. While our margins were impacted by significant commodity inflation, we’re taking actions to increase net realized revenue and reduce costs in order to improve performance. We are broadly on track with our plan for the year and we remain optimistic about our opportunities to create long-term shareholder value through execution of our Global Business Plan strategies.”

First Quarter 2018 Operating Results
Sales of $4.7 billion in the first quarter of 2018 were up 5 percent compared to the year-ago period. Changes in foreign currency exchange rates benefited sales by 3 percent. Organic sales improved 2 percent, as volumes increased 3 percent while net selling prices were down 1 percent. In North America, organic sales increased 3 percent in consumer products and 2 percent in K-C Professional. Outside North America, organic sales rose 2 percent in developed markets and 1 percent in developing and emerging markets.

First quarter operating profit was $247 million in 2018 and $848 million in 2017. Results in 2018 included $577 million of charges related to the 2018 Global Restructuring Program. First quarter 2018 adjusted operating profit was $824 million. Results were impacted by $175 million of higher input costs, driven by a $105 million increase in pulp and a $45 million increase in other raw materials. The operating profit comparison was also affected by lower net selling prices. On the other hand, results benefited from $90 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program, volume growth, reduced marketing, research and general spending and $20 million of favorable foreign currency translation effects.

The first quarter effective tax rate was 59.8 percent in 2018, which included an $82 million net charge associated with U.S. tax reform related matters. The first quarter adjusted effective tax rate in 2018 was 22.0 percent compared to the effective tax rate of 27.5 percent in the first quarter of 2017. The comparison benefited from U.S. tax reform, along with resolution of certain tax matters. The company continues to expect a full-year 2018 adjusted effective tax rate of 23 to 26 percent.

Kimberly-Clark’s share of net income of equity companies in the first quarter was $27 million in 2018 and $29 million in 2017. At Kimberly-Clark de Mexico, results benefited from organic sales growth, favorable currency effects and cost savings, but were negatively impacted by higher input costs.
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