Kimberly-Clark Corp. reported second-quarter 2021 results Friday and offered guidance.
“We have also experienced incidents of supply-chain disruption and increased currency and commodity volatility,” the company said.
The company is now targeting full-year 2021 organic sales decline of 0% to 2% and adjusted earnings per share of $6.65 to $6.90. The prior outlook was for organic sales growth of 0% to 1% and adjusted earnings per share of $7.30 to $7.55.
“The updated earnings outlook reflects significantly higher input cost inflation and lower sales volumes, partially offset by additional cost savings and reduced discretionary spending,” the company said.
CEO says 2Q reflects pandemic-driving volatility:
“Our second-quarter reflects continued pandemic-driven volatility. We are facing significantly higher input costs and a reversal in consumer tissue volumes from record growth in the year-ago period as consumers and retailers in North America continued to reduce home and retail inventory,” said Chairman and Chief Executive Mike Hsu.
“While we look forward to a return to a more normalized environment, we have moved decisively to take pricing actions to mitigate inflationary headwinds and continue to prudently manage costs.”
K-C Strategy 2022 continues:
“We will continue to execute K-C Strategy 2022,” Mr. Hsu said. “While our updated outlook reflects a more challenging near-term environment, we are taking appropriate actions and remain confident in our strategies to create long-term shareholder value.”
2018 Global Restructuring Program continues:
In January 2018, Kimberly-Clark initiated the 2018 Global Restructuring Program “to reduce the company’s structural cost base and enhance the company’s flexibility to invest in its brands, growth initiatives and capabilities critical to delivering future growth.”
As part of the program, Kimberly-Clark expects to exit or divest some low-margin businesses that generate about 1% of company net sales.
Restructuring expected completed in 2021:
The restructuring is expected to be completed in 2021. The company said it expects the program will generate annual pre-tax cost savings of $540 million to $560 million by the end of 2021.
2021 outlook and planning assumptions:
The company updated planning and guidance assumptions for full-year 2021:
Net sales increase 1% to 4%, prior assumption 3% to 5%. Foreign currency exchange rates favorable between 1% and 2%, no change.
Softex Indonesia acquisition expected to increase sales 2% in 2021 while exited businesses in conjunction with the 2018 Global Restructuring Program anticipated to reduce sales slightly, no change.
Adjusted operating profit expected to decline 11% to 14% year-on-year, prior assumption decline of 3% to 6%, according to the company.
Cost savings of $520 million to $560 million, including $400 million to $420 million from the FORCE program and $120 million to $140 million from the 2018 Global Restructuring Program, prior estimate was for total savings of $460 million to $520 million.
Net income from equity companies similar, to down somewhat, year-on-year, prior outlook similar to up somewhat.
Share repurchase in 2021 of $400 million to $450 million, prior outlook $650 million to $750 million, the company said.
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