Kimberly-Clark's stock dented by weaker-than-expected fourth-quarter earnings

By Ciara Linnane

Kleenex parent's profit and sales lagged estimates

Kimberly-Clark Corp.'s stock fell 3.4% early Wednesday, after the parent to consumer brands including Huggies diapers and Scott and Kleenex tissues posted fourth-quarter earnings that fell short of expectations.

The company (KMB) said it had net income of $509 million, or $1.50 a share, in the quarter, slightly higher than the $507 million, or $1.50 a share, posted in the year-earlier period. Adjusted per-share earnings came to $1.51, below the $1.54 FactSet consensus.

Sales rose to $4.970 billion from $4.964 billion a year ago, also below the $4.989 billion FactSet consensus. It was the second straight quarterly sales miss for the company.

Earnings were lifted by strong results in the personal care segment, said Chief Executive Mike Hsu. In North America, organic sales rose 5% in the personal care segment, while consumer tissue was up 3%, partially offset by a 3% decline in K-C Professional. Organic sales strip out currency effects as well as acquisitions and disposals.

Net sales at the overall personal care segment rose 2% to $2.6 billion, while consumer tissue sales fell 1% to $1.5 billion.

"We enter 2024 having advanced the company's strategic foundation and financial position, and with confidence this phase of cost recovery and supply chain stabilization is largely behind us," Hsu said in a statement.

The company will host an Investor Day in March to detail its priorities for the future, he said.

Read also: Kimberly-Clark's stock hit by BofA downgrade, while Clorox gets an upgrade

For 2024, Kimberly-Clark is expecting organic sales to grow at a low-to-mid single digit percentage rate and EPS to grow at a high single-digit rate on a constant-currency basis versus the prior year period.

The company raised its quarterly dividend by 3.4% to $1.22 a share. The new dividend is payable April 2 to shareholders of record as of March 8.

Other highlights from the quarter include a 5% gain in organic sales in developing and emerging markets. Organic sales in developed markets -Australia, South Korea and Western/Central Europe - grew 1% from a year ago.

Gross margin improved by 210 basis points to 34.9%, as higher net revenue realization, cost sales and favorable input costs partially offset unfavorable currency impacts and higher other manufacturing costs.

The strong dollar has re-emerged as a headwind for consumer companies in recent quarters, as it hurts companies that compete all over the world by reducing the amount they receive when they repatriate cash from weaker-currency countries.

See also: Procter & Gamble's earnings include a familiar refrain. The strong dollar is creating big headwinds.

The stock has fallen 7% in the last 12 months, while the S&P 500 SPX has gained 21%.

-Ciara Linnane

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01-24-24 0752ET

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