Kimberly-Clark lifted its annual profit forecast for the third time this year after its quarterly profit beat estimates, backed by higher prices and resilient demand for personal care products.
The Kleenex tissue maker, like other consumer goods peers, has consistently bumped up product prices over the past year to soften the blow from supply chain disruptions and higher raw material and labour costs.
That coupled with easing cost pressures helped it boost gross margins by 530 basis points to 35.8% in the third quarter, echoing larger rival Procter & Gamble that last week also reported an increase in margins.
Kimberly-Clark saw prices rise by 5% in the quarter through September, while volumes dropped by only 1%, indicating that customers, especially in North America, were showing little resistance to price hikes despite squeezed household budgets.
Outlook
The personal care products maker expects its annual adjusted earnings per share to rise between 15% and 17%, up from previous expectations for 10% to 14% growth.
It also expects adjusted operating margin to improve by 170 basis points in 2023, against its earlier estimate for a rise of 150 basis points.
The company, which also sells Huggies diapers, raised the lower-end of its organic sales forecast to between 4% and 5% growth, compared to its prior target of 3% to 5%.
Kimberly-Clark chair and CEO Mike Hsu stated, "Based on our year-to-date performance, we have raised our full-year outlook. We're confident that continued investments in our brands and commercial programmes will deliver superior value to our consumers and balanced and sustainable growth for our shareholders."
Quarterly Highlights
Excluding one-off items, Kimberly-Clark posted a profit of $1.74 per share, above estimates of $1.59 per share, according to LSEG data.
It reported third quarter net sales of $5.13 billion (€4.8 billion), while analysts on an average had expected sales of $5.15 billion (€4.9 billion).
Hsu added, "Our innovation and commercial capabilities continue to enhance the value proposition of our brands, while strong execution of our revenue growth management and ongoing productivity programmes enabled us to restore gross margin to pre-pandemic levels."
News by Reuters, additional reporting by ESM.
