Kimberly Clark reports 2% sales growth
Reporting its first-quarter results, Kimberly-Clark Corp. says it delivered strong top-line growth, with net sales of $5.2 billion, up 2% with organic sales growth of 5%. On a combined two year basis, organic growth increased 8%.
"I'm proud of our teams around the world for a strong start to the year. We grew organic sales by 5%, which reflects the health of our categories and the essential nature of our products," said Chairman and CEO Mike Hsu. "Our growth strategy continues to deliver behind strong execution of our commercial programs. Revenue growth management initiatives drove continued sales momentum with a better-than-expected elasticity impact on volume. Looking ahead, we have an exciting innovation pipeline that will deliver superior performance in health, wellness and sustainability. With our strong portfolio of trusted brands, we have our sights set on growing our categories and winning with consumers to enable long-term, profitable growth.
"While inflationary pressures have yet to subside, we drove continued improvement in our gross margin this quarter," Hsu continued. "We will continue to lean into our productivity and cost savings programs to mitigate elevated costs, while strategically investing in future growth platforms that will expand our presence in attractive markets for years to come."
Quarter Highlights
- Gross margin increased 340 basis points versus the prior year, driven by favorable net revenue realization offsetting inflation.
- Diluted earnings per share were $1.67, up 8%; up 24% versus adjusted earnings per share last year.
- Raised 2023 outlook for adjusted earnings per share growth of 6 to 10%, with operating profit up low double digits on a% basis versus adjusted results last year.
First Quarter 2023 Results
First quarter sales of $5.2 billion increased 2%, with organic sales up 5%, driven by a 10% increase in price and favorable product mix from ongoing revenue growth management programs offset by a 5% decrease in volume. Changes in foreign currency exchange rates decreased sales by approximately 4%. On a combined two year basis, organic growth increased 8%.
In North America, sales increased 5% over last year, including increases of 2% in Personal Care, 5% in Consumer Tissue and 12% in K-C Professional.
Outside North America, organic sales were up 4% in developing and emerging (D&E) markets and 10% in developed markets (Australia, South Korea and Western/Central Europe).
Gross margin improved by 340 basis points to 33.2%, with higher net revenue realization and cost savings offsetting higher input costs of $160 million.
First quarter operating profit was $787 million compared to $693 million last year, resulting in an operating margin of 15.1%, an increase of 150 basis points. On an adjusted basis, operating profit increased by 25%, driven by higher gross profit including $105 million in FORCE (Focus on Reducing Costs Everywhere) savings, offset by planned marketing, research and general expenses. Inflation increased input costs by $160 million this quarter, driven primarily by fiber and energy costs. Unfavorable currency effects impacted operating profit by $75 million during the quarter. Operating margin of 15.1% increased 280 basis points over adjusted operating margin last year.
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