2023-07-25 07:49:14 ET
Kimberly-Clark Corporation ( NYSE: KMB ) shot higher in early action on Tuesday after the consumer products company beat Q2 profit estimates and boosted full-year guidance. Organic sales rose 5% during the quarter, driven by a 9% increase in price and favorable product mix from ongoing revenue growth management programs, offset by a 3% decrease in volume. Changes in foreign currency exchange rates decreased sales by approximately 4%.
In North America, sales increased 6%, including increases of 1% in Personal Care, 7% in Consumer Tissue and 17% in K-C Professional. Outside North America, organic sales were up 6% in developing and emerging markets and 4% in developed markets (Australia, South Korea and Western/Central Europe).
Overall gross margin increased 380 basis points from a year ago to 34.0% of sales, driven by higher net revenue realization and cost savings offsetting higher input costs of $30M. Operating profit was $113M vs. $621M a year ago to result in an operating margin of 2.2%. Higher gross margin and the net benefit related to the sale of the Brazil tissue and KC-Professional businesses were offset by non-cash impairment charges on intangible assets primarily related to the company's Indonesia business, and higher marketing, research and general expenses. EPS was up 23% to $1.65 on an adjusted basis vs. $1.48 consensus, driven primarily by the 17% increase in adjusted operating profit, in addition to gains in equity income and lower income taxes than the same period last year.
CEO update: "We delivered another quarter of strong organic sales growth and gross margin expansion... Our growth strategy is working, and given the strength of our first-half results, we're raising our full-year outlook... Continued improvement in gross margin positions us well to invest in superior brand value propositions, including innovation and digital leadership, which will help grow our market shares over time and deliver balanced and sustainable growth for long-term shareholder value."
Looking ahead, Kimberly-Clark ( KMB ) sees 2023 organic sales growth of 3% to 5% vs. a prior range of +2% to +4%. Total sales growth of 0% to 2% is also anticipated, and adjusted EPS growth of 10% to 14% vs. +6% to +10% prior view.
Shares of Kimberly-Clark ( KMB ) rose 1.05% in premarket trading on Tuesday to $138.59 following the earning print.
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Kimberly-Clark rallies after profit beat, guidance boost