Kimberly-Clark Beats Q1 Estimates on Higher Pricing



Key takeaways

Kimberly-Clark (KMB) posted stronger-than-expected first-quarter results today. The stock was trading higher in the pre-market session. Kimberly-Clark’s top and bottom line handily exceeded analysts’ estimate thanks to higher pricing, cost savings, and share repurchases.

Kimberly-Clark’s organic sales sustained momentum and increased 3%, reflecting a 4% increase in pricing and a 1% benefit from the favorable mix. However, volumes stayed low and adversely impacted organic sales.

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Kimberly-Clark’s net sales came in ahead of analysts’ estimate thanks to the improved organic sales. However, net sales declined for the third consecutive quarter, reflecting adverse currency rates.

We expect higher pricing to drive the organic sales of the company’s peers including Church & Dwight (CHD), Procter & Gamble (PG), and Colgate-Palmolive (CL). However, currency volatility is expected to limit net sales.

Kimberly-Clark’s bottom line decreased on a YoY basis, reflecting cost headwinds and a higher effective tax rate. However, earnings handily exceeded analysts’ estimate, reflecting improved organic sales, cost savings, and share repurchases.

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Q1 financials

Kimberly-Clark posted net sales of $4.6 billion in the first quarter, down about 2% on a YoY basis. However, net sales surpassed analysts’ estimate of $4.5 billion. Organic sales increased 3%, driven by a 4% increase in pricing and a 1% benefit from the improved mix. However, volumes decreased by 2%.

Kimberly-Clark posted adjusted earnings of $1.66 per share in the first quarter, which fell 2.9% on a YoY basis but came in well ahead of analysts’ estimate of $1.54.


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