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Factors That Could Impact Kimberly-Clark’s Earnings in 2018

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What’s impacting KMB’s EPS?

Kimberly-Clark (KMB) has managed to increase its EPS (earnings per share) despite volume deleveraging. Similar to its peers, Kimberly-Clark turned to productivity and cost-savings to drive its profit growth amid a weak sales environment. The company is generating significant cost-savings from its FORCE (Focused on Reducing Costs Everywhere) program, which continues to drive the company’s bottom line higher. A lower share count has further cushioned its EPS.

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However, in the near term, Kimberly-Clark’s profitability is likely to take a hit from a higher-than-expected increase in commodity costs, including polymer resin and pulp. Lower net selling prices due to an increasingly competitive environment are further expected to hurt its EPS growth rate. Planned promotions to spur demand and weak volume trends in North America and South Korea are also anticipated to remain a drag.

Outlook

Despite pressure on Kimberly-Clark’s profitability from higher input costs and lower net selling prices, analysts expect the company’s EPS to improve on a YoY (year-over-year) basis. They project a 2.9% increase in its 2017 earnings. The company estimates that its EPS will increase 5.8% in 2018.

KMB plans to offset the adverse impact of higher costs through incremental productivity and cost-savings. Improvement in volumes led by innovation-led products and favorable currency movement could further support its bottom-line growth rate.

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