Kimberly-Clark missed on both earnings and revenues in the fourth
quarter 2014. Earnings of $1.35 per share however grew 3.8% from
the year-ago figure, boosted by organic sales growth, cost savings,
decline in marketing, research and general expenses and lower share
count owing to share buybacks. However, earnings were negatively
impacted by unfavorable foreign currency exchange rate effects,
input cost inflation, higher taxes and lower net income from equity
companies. Meanwhile, organic sales grew 3% backed by higher sales
volume and selling prices. Overall, we are encouraged by the
company's regular innovations, growth initiatives and a strong
international presence. Further, after the company's spin-off of
its health care segment, it will be able to focus on its core
consumer and professional brands. However, the company continues to
expect higher input costs and currency trends to impact
profitability and margins in the near term. We therefore prefer to
remain on the sidelines with a Neutral recommendation.
Incorporated in Delaware in 1928, Kimberly-Clark Corporation
(KMB) is principally engaged in the manufacture and marketing of a
wide range of consumer products around the world. The company sells
its products to supermarkets mass merchandisers drugstores
warehouse clubs variety and department stores retail outlets
manufacturing, lodging, office building, food service, and health
care establishments and high volume public facilities.
Based on product grouping, the company conducts its operations
in four business segments namely Personal Care, Consumer Tissue,
K-C Professional & Other and Health Care.
The Personal Care segment includes products like disposable
diapers, training and youth pants, and swim pants baby wipes
feminine and incontinence care products under brands, such as
Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays,
Depend and Poise.
The Consumer Tissue segment includes bathroom tissue, paper
towels, napkins and related products for household use under brands
such as Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Hakle
The K-C Professional & Other segment consists of facial and
bathroom tissue, paper towels, napkins, wipers and a range of
safety products under Kimberly-Clark, Kleenex, Scott, WypAll,
Kimtech, KleenGuard, Kimcare and Jackson brands.
The Health Care segment consists of disposable health care
products, such as surgical drapes and gowns, sterilization wrap,
face masks, exam gloves, digestive health and, respiratory
products, pain management products and other disposable medical
products under Kimberly-Clark, Ballard, ON-Q and other brand
On Oct 31, 2014, Kimberly-Clark completed the spin-off of its
health care business, which became a separate publicly traded
company called Halyard Health, Inc. (HYH) and began trading on the
New York Stock Exchange from Nov 3. However, the company's
financials and statements will include the health care business as
the third quarter of 2014 extends through Oct 31.
The divested health care business will be presented as
discontinued operations, which will exclude overhead costs
previously allocated to health care that will remain part of
Kimberly-Clark after the spin-off.
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