) third quarter 2012 adjusted earnings (excluding charges) of
$1.34 per share beat the Zacks Consensus Estimate of $1.32 per
share by 1.5 %. Adjusted earnings also surpassed the prior-year
quarter's earnings of $1.26 per share by 6.4%.
KIMBERLY CLARK (KMB): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
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Bottom-line growth was boosted by organic sales growth, cost
savings and a reduced commodity costs. Adjusted earnings do
not include costs for pulp and tissue restructuring actions.
Quarter in Detail
The company reported net sales of $5.2 billion in third quarter
2012, down 3% from the prior year quarter. Organic sales grew 3%
from prior year quarter, driven by volume growth, improved
pricing and strong performance in K-C International segment. The
company's results slightly lagged the Zacks Digest average
revenue of $5.4 billion by 2.2 %.
Sales volume contributed 2% to the sales increase, while net
selling prices added 1%. However, the results were impacted by
unfavorable foreign currency fluctuations, which limited sales
growth by 5%. The exit of non-strategic products also eroded
sales volumes by an additional 1%.
Excluding costs for the pulp and tissue restructuring, adjusted
operating profit grew 8% to $814 million in third quarter 2012,
driven by increase in organic sales and cost savings from the
Kimberly-Clark's FORCE (Focused On Reducing Costs Everywhere)
Personal Care Products:
Personal Care segment includes products like disposable diapers,
training/ youth/ swim pants; baby wipes; feminine and
incontinence care products under brands, such as Huggies,
Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend
Sales grew 1% on a year-over-year basis to $2.4 billion. The
results were benefited from a 4% increase in sales volumes and 2%
rise in net selling prices, which offset the negative impact from
currency fluctuations by 5%. The segment witnessed positive sales
growth in North America and K-C International, partially offset
by decline in sales growth in Europe.
Segment's operating profit increased 10% on a year-over-year
basis to $436 million in the quarter due to organic sales growth,
reduced commodity prices and cost savings, partially offset by
rise in marketing, research and general expenditures and
unfavorable currency rates.
: 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 and
Sales were $1.6 billion in third quarter 2012, down 6% y/y, owing
to currency translation. The segment witnessed decline in sales
in all geographic regions including North America, Europe and K-C
International. However, organic sales volumes grew 2% y/y.
Segment operating profit climbed 5% to $216 million in the
quarter driven by benefits from cost savings, organic sales
increase and commodity cost deflation, partially offset by higher
marketing, research and general expenses and unfavorable currency
K-C Professional (KCP) & Other:
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.
Sales decreased 5% from prior year quarter to $0.8 billion in
third quarter 2012, driven by unfavorable currency rates. The
segment witnessed decline in sales in all geographic regions
including North America, Europe and K-C International.
Segment operating profit for the segment increased 13% to $144
million driven by input cost deflation and cost savings,
partially offset by increased marketing, research and general
expenses and unfavorable currency rates.
The Health Care segment consists of disposable health care
products, such as surgical drapes and gowns, sterilization wrap,
face masks, exam gloves, digestive health, respiratory products,
pain management products and other disposable medical products.
Sales declined 3% from prior year quarter to $0.4 billion in
third quarter 2012, resulting from unfavorable currency rates by
2% and sales volume by 1%.
Operating profit was $59 million, up 5% year over year, owing to
lower commodity cost.
Fiscal 2012 Outlook
A peer of
Procter & Gamble
), Kimberly-Clark raised its expectation of adjusted earnings (
for fiscal 2012 to the range of $5.15 to $5.25, from the previous
guidance of $5.05 to $5.20 per share. The earnings per share is
expected to grow 7% to 9% from the prior-year levels. The company
raised the guidance as it expects stronger organic sales growth,
better cost savings, and reduced input cost in the upcoming
The company announced plans to dissolve the diaper segment of
Western and Central Europe, excepting the Italian market. The
company also plans to streamline its manufacturing facilities in
We currently have a Neutral recommendation on Kimberly-Clark
Corporation. The stock carries a Zacks #3 Rank (a short-term Hold