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Kimberly-Clark's (KMB) Saving Plans Bode Well Amid High Costs
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Kimberly-Clark Corporation (KMB - Free Report) appears well-placed due to its focus on strategic growth pillars and efficient saving initiatives amid elevated cost headwinds.
In its first-quarter 2023 earnings release, management raised the 2023 earnings per share (EPS) and operating profit outlook. Kimberly-Clark now envisions 2023 EPS to increase 6-10% from the adjusted EPS of 2022. Management expects the operating profit to grow in the low double digits. It anticipates net sales growth in 2023 in the range of flat to 2%, while organic sales are projected to increase 2-4%.
Growth Pillars & Robust Savings Plan
Kimberly-Clark has been committed to its three key strategic growth pillars. These include a focus on improving its core business in developed markets, speeding up the growth of the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales.
KMB has been progressing well with these objectives, which have been aiding its portfolio and expanding the global business. In February 2022, Kimberly-Clark acquired a majority stake in Thinx, Inc. — the pioneer in the reusable period and incontinence underwear category.
In October 2020, Kimberly-Clark completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market. The net impact of the Softex buyout, along with business exits in conjunction with the 2018 Global Restructuring Program, increased sales by almost 1% in 2021.
Image Source: Zacks Investment Research
Kimberly-Clark has been taking robust steps to lower costs. This is highlighted by the 2018 Global Restructuring Program and the Focus on Reducing Costs Everywhere or FORCE Program.
In 2018, KMB initiated the restructuring program to reduce the structural cost base by streamlining and simplifying the manufacturing supply chain and overhead organization. The restructuring actions were concluded at the end of 2021. As part of this initiative, the company exited or divested some low-margin businesses that reflected about 1% of net sales and closed or sold 11 facilities.
Kimberly-Clark aggressively cuts costs and enhances supply-chain productivity through the FORCE Program. In the first quarter of 2023, the company generated savings of $105 million from the FORCE program.
High Costs
Kimberly-Clark has been battling high input costs for the past few quarters. Although the company’s gross margin expanded in the first quarter of 2023, it was affected by increased input costs to the tune of $160 million. Management expects a $100-$200 million rise in input costs for 2024. In the first quarter, higher marketing, research and general expenses put pressure on KMB’s operating profit.
While input costs are expected to flare up in 2023, management is focused on undertaking revenue management actions to counter inflation. These actions are likely to help this Zacks Rank #3 (Hold) company continue with its growth story.
Shares of KMB have rallied 8.9% in the past three months against the industry’s drop of 0.7%.
Solid Staple Stocks
Some better-ranked consumer staple stocks are The Kraft Heinz Company (KHC - Free Report) , McCormick & Company, Incorporated (MKC - Free Report) and Conagra Brands (CAG - Free Report) .
The Zacks Consensus Estimate for The Kraft Heinz Company’s current fiscal-year sales and earnings suggests growth of 2.8% and 3.6%, respectively, from the year-ago reported figures.
McCormick, which operates as a manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2. MKC has a trailing four-quarter negative earnings surprise of 3.7%, on average.
The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings suggests growth of 6.4% and 3.6%, respectively, from the year-ago reported numbers.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests growth of 7.1% and 16.5%, respectively, from the year-ago reported numbers.
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Kimberly-Clark's (KMB) Saving Plans Bode Well Amid High Costs
Kimberly-Clark Corporation (KMB - Free Report) appears well-placed due to its focus on strategic growth pillars and efficient saving initiatives amid elevated cost headwinds.
In its first-quarter 2023 earnings release, management raised the 2023 earnings per share (EPS) and operating profit outlook. Kimberly-Clark now envisions 2023 EPS to increase 6-10% from the adjusted EPS of 2022. Management expects the operating profit to grow in the low double digits. It anticipates net sales growth in 2023 in the range of flat to 2%, while organic sales are projected to increase 2-4%.
Growth Pillars & Robust Savings Plan
Kimberly-Clark has been committed to its three key strategic growth pillars. These include a focus on improving its core business in developed markets, speeding up the growth of the Personal Care segment in developing and emerging markets and enhancing digital and e-commerce capacities. The company expects to meet these objectives through product development across different categories and leveraging capabilities in marketing and sales.
KMB has been progressing well with these objectives, which have been aiding its portfolio and expanding the global business. In February 2022, Kimberly-Clark acquired a majority stake in Thinx, Inc. — the pioneer in the reusable period and incontinence underwear category.
In October 2020, Kimberly-Clark completed the acquisition of Softex Indonesia — a leading player in the Indonesian personal care market. The net impact of the Softex buyout, along with business exits in conjunction with the 2018 Global Restructuring Program, increased sales by almost 1% in 2021.
Image Source: Zacks Investment Research
Kimberly-Clark has been taking robust steps to lower costs. This is highlighted by the 2018 Global Restructuring Program and the Focus on Reducing Costs Everywhere or FORCE Program.
In 2018, KMB initiated the restructuring program to reduce the structural cost base by streamlining and simplifying the manufacturing supply chain and overhead organization. The restructuring actions were concluded at the end of 2021. As part of this initiative, the company exited or divested some low-margin businesses that reflected about 1% of net sales and closed or sold 11 facilities.
Kimberly-Clark aggressively cuts costs and enhances supply-chain productivity through the FORCE Program. In the first quarter of 2023, the company generated savings of $105 million from the FORCE program.
High Costs
Kimberly-Clark has been battling high input costs for the past few quarters. Although the company’s gross margin expanded in the first quarter of 2023, it was affected by increased input costs to the tune of $160 million. Management expects a $100-$200 million rise in input costs for 2024. In the first quarter, higher marketing, research and general expenses put pressure on KMB’s operating profit.
While input costs are expected to flare up in 2023, management is focused on undertaking revenue management actions to counter inflation. These actions are likely to help this Zacks Rank #3 (Hold) company continue with its growth story.
Shares of KMB have rallied 8.9% in the past three months against the industry’s drop of 0.7%.
Solid Staple Stocks
Some better-ranked consumer staple stocks are The Kraft Heinz Company (KHC - Free Report) , McCormick & Company, Incorporated (MKC - Free Report) and Conagra Brands (CAG - Free Report) .
The Kraft Heinz Company, a food and beverage product company, currently carries a Zacks Rank #2 (Buy). KHC has a trailing four-quarter earnings surprise of 10.7%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for The Kraft Heinz Company’s current fiscal-year sales and earnings suggests growth of 2.8% and 3.6%, respectively, from the year-ago reported figures.
McCormick, which operates as a manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2. MKC has a trailing four-quarter negative earnings surprise of 3.7%, on average.
The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings suggests growth of 6.4% and 3.6%, respectively, from the year-ago reported numbers.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests growth of 7.1% and 16.5%, respectively, from the year-ago reported numbers.