Kimberly-Clark Announces Second Quarter 2021 Results

Executive Summary
*Second quarter 2021 net sales of $4.7 billion increased 2 percent compared to the year-ago period, with an organic sales decline of 3 percent.
*Diluted net income per share for the second quarter was $1.19 in 2021 and $1.99 in 2020.
*Second quarter adjusted earnings per share were $1.47 in 2021 compared to $2.20 in 2020. Adjusted earnings per share exclude certain items described later in this news release.
*Diluted net income per share for 2021 is anticipated to be $6.00 to $6.50.
*The company is now targeting full-year 2021 organic sales decline of 0 to 2 percent and adjusted earnings per share of $6.65 to $6.90. The prior outlook was for organic sales growth of 0 to 1 percent and adjusted earnings per share of $7.30 to $7.55. The updated earnings outlook reflects significantly higher input cost inflation and lower sales volumes, partially offset by additional cost savings and reduced discretionary spending.

Chairman and Chief Executive Officer Mike Hsu said, “Our second quarter reflects continued pandemic-driven volatility. We are facing significantly higher input costs and a reversal in consumer tissue volumes from record growth in the year ago period as consumers and retailers in North America continued to reduce home and retail inventory. While we look forward to a return to a more normalized environment, we have moved decisively to take pricing actions to mitigate inflationary headwinds and continue to prudently manage costs. We remain confident in our strategy and in our fundamental brand performance. Our personal care business is performing well, and we continue to improve our market positions in key markets and realize robust growth across Developing and Emerging Markets.”

Hsu continued, “We will continue to execute K-C Strategy 2022. While our updated outlook reflects a more challenging near-term environment, we are taking appropriate actions and remain confident in our strategies to create long-term shareholder value.”

Second Quarter 2021 Operating Results
Sales of $4.7 billion in the second quarter of 2021 increased 2 percent versus the prior year. Changes in foreign currency exchange rates increased sales 3 percent and the net impact of the Softex Indonesia acquisition and exited businesses in conjunction with the 2018 Global Restructuring Program increased sales 2 percent. Organic sales decreased 3 percent as volumes declined 4 percent while the combined impact of changes in net selling prices and product mix increased sales approximately 1 percent.

In North America, organic sales decreased 11 percent in consumer products and 4 percent in K-C Professional. Volumes in North America, particularly consumer tissue, were negatively impacted by consumer and retailer destocking following the stock up that occurred in prior periods related to the global outbreak of COVID-19. Outside North America, organic sales were up 9 percent in developing and emerging (D&E) markets and up 1 percent in developed markets.

Second quarter operating profit was $613 million in 2021 and $925 million in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program. Second quarter adjusted operating profit was $676 million in 2021 and $1,012 million in 2020. Results were impacted by lower sales volumes and $345 million of higher input costs, driven by pulp, other materials and distribution costs. Other manufacturing costs were higher, including inefficiencies from lower production volumes. Results benefited from higher net selling prices, $115 million of cost savings from the company’s FORCE (Focused On Reducing Costs Everywhere) program, $30 million of cost savings from the 2018 Global Restructuring Program and lower marketing, research and general expense.

The second quarter effective tax rate was 22.8 percent in 2021 and 23.2 percent in 2020. The second quarter adjusted effective tax rate was 22.5 percent in 2021 and 22.7 percent in 2020. Kimberly-Clark’s share of net income of equity companies in the second quarter was $28 million in 2021 and $35 million in 2020.
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