DALLAS, April 23, 2021 - Kimberly-Clark Corporation (NYSE: KMB) today reported first quarter 2021 results.
- First quarter 2021 net sales of $4.7 billion decreased 5 percent compared to the year-ago period, including an organic sales decline of 8 percent.
- Diluted net income per share for the first quarter was $1.72 in 2021 and $1.92 in 2020.
- First quarter adjusted earnings per share were $1.80 in 2021 compared to $2.13 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 $6.65 to $7.15.
- The company is now targeting full-year 2021 organic sales growth of 0 to 1 percent and adjusted earnings per share of $7.30 to $7.55. The prior outlook was for organic sales growth of 1 to 2 percent and adjusted earnings per share of $7.75 to $8.00. The updated earnings outlook reflects significantly higher input cost inflation and lower sales volumes, partially offset by higher net selling prices and additional cost savings.
Chairman and Chief Executive Officer Mike Hsu said, "Our first quarter results and updated outlook reflect a volatile and challenging environment. First quarter comparisons were impacted by COVID-19 related stock up in the year-ago period, consumer tissue category softness and commodity inflation. We also experienced temporary supply chain disruptions related to severe weather conditions in the southern part of the United States. Nonetheless, our market shares remain healthy overall as we leverage our enhanced commercial capabilities. In addition, we continue to achieve strong cost savings, return cash to shareholders and are taking decisive actions to mitigate commodity headwinds."
Hsu continued, "Looking ahead, we will continue to execute K-C Strategy 2022, focus on further improving our market positions and invest for long-term success. While our updated outlook reflects a more challenging near-term environment, our business remains fundamentally healthy and we are confident in our strategies to create long-term shareholder value."
First Quarter 2021 Operating Results
Sales of $4.7 billion in the first quarter of 2021 decreased 5 percent versus the prior year. The Softex Indonesia acquisition increased sales 2 percent and changes in foreign currency exchange rates increased sales slightly. Volumes declined 10 percent compared to an increase of more than 8 percent in the year-ago period, while net selling prices and product mix each improved 1 percent.
The volume comparison reflects increased shipments in the year-ago period to support consumer stock up related to the outbreak of COVID-19. The stock up impacted all business segments, in particular consumer tissue, and all major geographies. In addition, volumes in North American consumer products in 2021 were negatively impacted by supply chain disruptions related to severe weather conditions that occurred in February in the southern part of the United States. The disruptions included the temporary shutdown of several company manufacturing facilities and reduced availability of raw materials from suppliers, mostly impacting the company's personal care segment.
In North America, organic sales decreased 10 percent in consumer products and 8 percent in K-C Professional. Outside North America, organic sales were down 1 percent in developing and emerging (D&E) markets and 14 percent in developed markets.
First quarter operating profit was $770 million in 2021 and $904 million in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program. First quarter adjusted operating profit was $804 million in 2021 and $997 million in 2020. Results were impacted by lower sales volumes and $135 million of higher input costs, driven by pulp, other materials and distribution costs. Other manufacturing costs were higher, including costs related to COVID-19 and inefficiencies from lower production volumes, and foreign currency transaction effects also negatively impacted the comparison. Results benefited from higher net selling prices, $65 million of cost savings from the company's FORCE (Focused On Reducing Costs Everywhere) program and $40 million of cost savings from the 2018 Global Restructuring Program. Marketing, research and general expenses were lower year-on-year, driven by administrative costs.
The first quarter effective tax rate was 20.9 percent in 2021 and 23.6 percent in 2020. The first quarter adjusted effective tax rate was 20.9 percent in 2021 and 23.2 percent in 2020. The rate in 2021 benefited from certain planning initiatives. Kimberly-Clark's share of net income of equity companies in the first quarter was $39 million in 2021 and $38 million in 2020.
Cash Flow and Balance Sheet
Cash provided by operations in the first quarter was $321 million in 2021 and $704 million in 2020. The decrease was driven by higher working capital, including payments for accrued expenses, and lower earnings. Capital spending for the first quarter was $298 million in 2021 and $352 million in 2020. First quarter 2021 share repurchases were 1.3 million shares at a cost of $175 million. Total debt was $8.8 billion at March 31, 2021 and $8.4 billion at the end of 2020.
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