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Why Kimberly-Clark’s Q4 Revenues Are Expected to Decline

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Analysts’ estimate

Kimberly-Clark (KMB) could continue to disappoint investors with its tepid sales performance at least in the foreseeable future. Wall Street expects Kimberly-Clark’s revenues to continue to fall in the fourth quarter. Meanwhile, its top line is also projected to decline in the first half of 2019.

Analysts expect Kimberly-Clark to post revenues of $4.5 billion, which represents a YoY decline of 2.8%. An anticipated reduction in volumes and pricing in China, adverse currency rates, and increased competition is likely to affect its top line.

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In comparison, analysts expect Church & Dwight (CHD) and Clorox (CLX) to outperform peers with their sales growth rate. Both these companies are expected to report YoY improvement in their top line driven by a balanced portfolio of value and premium brands led by innovation and acquisition. On the contrary, Colgate-Palmolive (CL) and Procter & Gamble are expected to report weak sales in the coming quarters.

We expect Kimberly-Clark’s top line to get some cushion from improvement in pricing and a favorable mix. However, persisting challenges in the developing and emerging markets, primarily China, could continue to hurt its top line. Also, adverse currency rates and competitive headwinds in its value segment could pressure fourth-quarter sales.

Kimberly-Clark’s recent sales performance

Kimberly-Clark’s top-line growth rate has deteriorated on a quarter-over-quarter basis, as can be seen in the graph above. The company’s top line declined by 1.8% during the last reported quarter, reflecting weak volumes and unfavorable currency rates. However, third-quarter sales were slightly better than analysts’ expectation thanks to an increase in pricing and a favorable mix.

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