Strong Demand Drives Kimberly-Clark’s Profit Growth
The maker of Kleenex tissues and Huggies diapers, Kimberly-Clark, has reported a robust quarterly performance, exceeding Wall Street estimates. The company’s strategic decision to focus on its own brands, rather than private label diaper-making, has paid off, with sales and volumes showing significant growth.
Marketing and Advertising Pay Off
By investing in marketing and advertising, Kimberly-Clark has successfully driven demand for its products. This move has helped the company to temper price hikes, a strategy adopted by many consumer goods companies. As a result, volumes have recovered, rising 1.5% in the fourth quarter, while prices increased 0.6%.
Beating Estimates Across the Board
Kimberly-Clark’s quarterly net sales of $4.93 billion surpassed the average analyst estimate of $4.86 billion. The company’s performance mirrors that of Procter & Gamble, another consumer goods bellwether, which also reported strong quarterly results.
Cost Control and Margin Growth
The company’s focus on cost control has led to a 50-basis-point increase in gross margins, despite higher manufacturing and supply chain costs. This has enabled Kimberly-Clark to maintain a strong profit margin.
Annual Profit Growth Forecast
Looking ahead, Kimberly-Clark expects annual adjusted earnings per share to rise by a mid-to-high single-digit percentage on a constant-currency basis. This forecast exceeds estimates of a 3.2% increase to $7.58 per share.
Regional Performance
In the quarter ended December 31, volumes in Kimberly-Clark’s North America business grew 1.9%. The company earned $1.50 per share on an adjusted basis, slightly below estimates of $1.51.
Overall, Kimberly-Clark’s strong performance is a testament to its strategic decisions and ability to adapt to changing market conditions.
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