- Achieved net sales of $20.4 billion with better-than-anticipated organic sales growth and stronger cost, margin and earnings recovery in 2023
- Company initiates financial outlook for 2024 reflecting continued momentum
DALLAS, Jan. 24, 2024 - Kimberly-Clark Corporation (NYSE: KMB) today reported fourth quarter and full-year 2023 results and provided its 2024 outlook. Comparisons are made versus the prior year period, unless otherwise noted.
"We had a solid finish to 2023, delivering strong organic growth as well as cost and earnings recovery above our initial expectations," said Kimberly-Clark Chairman and CEO Mike Hsu. "Our fourth quarter results demonstrate topline momentum with more balanced growth across volume, mix and price led by strong Personal Care results. I'm proud of our team's outstanding execution, including enhancing the value proposition of our global brands through consumer-centric innovation and stronger, more integrated commercial capabilities."
Hsu continued, "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. I'm confident we are positioned to accelerate and enhance the performance of our business and create meaningful shareholder value as we deliver our purpose of better care for a better world."
The company intends to hold an Investor Day in late March to detail its strategic priorities and key initiatives underpinning its vision for the future.
Quarter Highlights
- Delivered net sales of $5.0 billion, in line with prior year, with organic sales growth of 3 percent.
- Gross margin was 34.9 percent, up 210 basis points versus the prior year, driven by favorable net revenue realization and productivity.
- Diluted earnings per share were $1.50; adjusted earnings per share were $1.51, down 2 percent versus prior year.
Fourth Quarter 2023 Results
Fourth quarter sales of $5.0 billion were in line with prior year, with organic sales up 3 percent, driven by a 2 percent increase in price from ongoing revenue growth management programs and a 1 percent favorable product mix, with volumes in line with the prior year period and volume trends improving for the fourth consecutive quarter. Changes in foreign currency exchange rates reduced sales by approximately 2 percent and the divestiture of the tissue and K-C Professional business in Brazil reduced sales by approximately 1 percent.
In North America, organic sales increased 3 percent over last year, including increases of 5 percent in Personal Care and 3 percent in Consumer Tissue that were partially offset by a 3 percent decrease in K-C Professional.
Outside North America, organic sales were up 5 percent in developing and emerging (D&E) markets. Organic sales in developed markets (Australia, South Korea and Western/Central Europe) grew 1 percent versus prior year.
Gross margin improved by 210 basis points to 34.9 percent, with higher net revenue realization, cost savings and favorable input costs partially offset by unfavorable currency impacts and higher other manufacturing costs. Gross profit grew 7 percent including $50 million in FORCE (Focus on Reducing Costs Everywhere) savings and $50 million in lower input costs.
Fourth quarter operating profit was $670 million compared to $712 million last year, resulting in an operating margin of 13.5 percent. Operating profit decreased by 6 percent, driven by currency impacts of $170 million that reflected a combination of currency translation, transactional currency costs, and net monetary position losses in hyperinflationary markets. Excluding this factor, an underlying increase in gross profit dollars was partially offset by planned increases in marketing, research and general expenses, coupled with higher incentive compensation levels.
Net interest expense was $38 million, 45 percent lower than prior year driven by higher interest income.
Fourth quarter effective tax rate was 25.2 percent, higher than 22.5 percent in the prior year. On an adjusted basis, the effective rate in the fourth quarter was 25.2 percent, compared to 22.6 percent in the prior year period.
Net income of equity companies was $53 million compared to $35 million last year driven by Kimberly-Clark de Mexico.
Diluted EPS was in line with prior year at $1.50 on a reported basis. On an adjusted basis, EPS decreased 2 percent to $1.51, driven by impact of hyperinflationary economies and higher taxes offset by gross profit expansion and net income of equity companies.
Full-Year 2023 Results
In 2023, sales of $20.4 billion increased 1 percent, with organic sales up 5 percent, driven by approximately 6 percent increase in price from ongoing revenue growth management programs and 1 percent from favorable product mix, offset by a 2 percent decrease in volume, with sequential improvements throughout the year. Changes in foreign currency exchange rates reduced sales by 3 percent, and the exit of its tissue and K-C Professional business in Brazil reduced sales by 1 percent.
Gross margin improved by 360 basis points to 34.4 percent and adjusted gross margin improved by 370 basis points to 34.5 percent reflecting higher net revenue realization as well as cost savings from its FORCE program of $325 million more than offsetting higher input costs of $65 million and higher other manufacturing costs of $195 million.
Full-year operating profit was $2.34 billion in 2023 versus $2.68 billion in 2022. Results included non-cash impairment charges on intangible assets that were partially offset by a net benefit from the Brazil divestiture in the second quarter 2023.
Full-year adjusted operating profit was $2.96 billion in 2023 versus $2.62 billion in 2022. The increases from organic sales and benefits from productivity-led cost savings were partially offset by higher other manufacturing costs, input costs, and marketing, research and general expenses, and unfavorable impact from foreign currency.
In 2023, diluted earnings per share were $5.21 compared to $5.72 last year. 2023 adjusted earnings per share were $6.57 compared to $5.63 last year.
Source: Kimberly-Clark
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