DALLAS, Jan. 25, 2021 -- Kimberly-Clark Corporation (NYSE: KMB) today reported year-end 2020 results and provided its 2021 outlook.
- Fourth quarter 2020 net sales of $4.8 billion increased 6 percent compared to the year-ago period, including organic sales growth of 5 percent. Full-year 2020 net sales of $19.1 billion increased 4 percent, with organic sales up 6 percent.
- Diluted net income per share for the fourth quarter was $1.58 in 2020 and $1.59 in 2019. Full-year diluted net income per share was $6.87 in 2020 and $6.24 in 2019.
- Fourth quarter adjusted earnings per share were $1.69 in 2020 compared to $1.71 in 2019. Adjusted earnings per share exclude certain items described later in this news release.
- Full-year adjusted earnings per share were $7.74 in 2020, up 12 percent compared to $6.89 in 2019. The company's previous guidance was for adjusted earnings per share of $7.50 to $7.65.
- Net sales in 2021 are expected to increase 4 to 6 percent, including organic sales growth of 1 to 2 percent. Diluted net income per share for 2021 is anticipated to be $7.10 to $7.60. Adjusted earnings per share in 2021 are expected to be $7.75 to $8.00.
- The company's Board of Directors has approved a 6.5 percent increase in the quarterly dividend, which is the 49th consecutive annual increase in the dividend. The Board also authorized a new $5 billion share repurchase program which supplements the current $5 billion authorization that is expected to be completed later in 2021. These actions reflect the company's strong cash flow and growth prospects along with an ongoing commitment to return cash to shareholders.
Chairman and Chief Executive Officer Mike Hsu said, "In 2020, we grew organic sales 6 percent, with healthy underlying performance and increased demand because of COVID-19. We also significantly increased brand investments and improved our market share positions. In addition, we achieved $575 million of cost savings and returned $2.15 billion to shareholders through dividends and share repurchases. Finally, we grew adjusted earnings per share 12 percent, well above our medium-term objective. I'm extremely proud of what our teams accomplished while staying relentlessly focused on employee health and safety and meeting the needs of our consumers during this unprecedented time period."
Hsu continued, "Going forward we will continue to execute K-C Strategy 2022. We expect to further improve our market positions by building on our current momentum and leveraging our enhanced commercial capabilities. At the same time, we will continue to operate with financial discipline. We expect more challenging category conditions and higher commodity costs in 2021. That said, we remain very optimistic about our strategies to deliver balanced and sustainable growth over time and create long-term shareholder value."
Fourth Quarter 2020 Operating Results
Sales of $4.8 billion in the fourth quarter of 2020 increased 6 percent compared to the year-ago period. Organic sales rose 5 percent and the Softex Indonesia acquisition increased sales by approximately 2 percent, while changes in foreign currency exchange rates reduced sales 1 percent. Net selling prices increased approximately 3 percent, volumes increased 2 percent and product mix was slightly favorable. In North America, organic sales increased 11 percent in consumer products but fell 7 percent in K-C Professional. Outside North America, organic sales rose 3 percent in developing and emerging (D&E) markets and 2 percent in developed markets.
Fourth quarter operating profit was $749 million in 2020 and $751 million in 2019. Results in both periods include charges related to the 2018 Global Restructuring Program. Results in 2020 also include Softex Indonesia acquisition-related costs and a benefit from the resolution of a business tax matter in Brazil. Results in 2019 also include a gain on the sale of property associated with a former manufacturing facility that was closed as part of a past restructuring.
Fourth quarter adjusted operating profit was $767 million in 2020 and $826 million in 2019. Results benefited from organic sales growth, $110 million of cost savings from the company's FORCE (Focused On Reducing Costs Everywhere) program and $25 million of cost savings from the 2018 Global Restructuring Program. Input costs increased $40 million and other manufacturing costs were higher, including costs related to COVID-19. Advertising spending increased significantly and general and administrative costs were higher, including incentive compensation expense and capability-building investments. Foreign currency transaction effects also negatively impacted the comparison.
The fourth quarter effective tax rate was 24.6 percent in 2020 and 17.2 percent in 2019. The fourth quarter adjusted effective tax rate was 22.2 percent in 2020 and 24.6 percent in 2019. The rate in 2020 benefited from certain planning initiatives.
Kimberly-Clark's share of net income of equity companies in the fourth quarter was $38 million in 2020 and $32 million in 2019. Results benefited from organic sales growth but were negatively impacted by unfavorable currency effects.