Kimberly-Clark (KMB 105.59, -4.64, -4.21%) is indicated higher pre-market after
the company reported modestly better than expected third quarter results this
Adjusted third quarter earnings grew 7% to $1.71/share. Sales fell 2% to $4.6 bln due to a 3% foreign exchange headwind while organic sales grew 1%.
That marks a slight improvement from flat organic sales growth in the second quarter. What's more, this is only the second time the company has beat estimates on the top-line in nine quarters.
Results at the Consumer Tissue Segment deteriorated sequentially. Sales fell 3% due to a 5% decline in volume. The company cited lower promotional activity in North America, where volume fell 8%.
The company continues to target full-year 2018 organic sales growth of ~1% and adjusted earnings per share up 6-9% to $6.60 - $6.80. Guidance for net sales and profits were tweaked towards the low end of its prior outlook due to an increased foreign exchange headwind and higher input costs.
Sales growth will be supported by price increases to offset significant commodity cost inflation going forward. In August, the company announced mid-to-high single digit price increases for Cottonelle and Scott 1000 bathroom tissue, Kleenex facial tissue, Viva paper towels, Huggies diapers, Pull-Ups training pants, and GoodNites youth pants, effective this quarter and the first quarter of next year.
The company also named Michael Hsu Chief Executive Officer, effective January 1, 2019. He has served as Kimberly-Clark's President and Chief Operating Officer since January 1, 2017. He succeeded Thomas Falk, 60, who has served as Chief Executive Officer since 2002 and Chairman of the Board of Directors since 2003. Falk will become Executive Chairman of the Kimberly-Clark Board of Directors to help ensure a smooth transition.
The market may be excited about new leadership given the company's mixed results as of late.
Kimberly-Clark currently expects its global restructuring program to generate annual pre-tax cost savings of $500-550 mln by the end of 2021. Management will host a conference call at 10:00 this morning.
The company has a $38 bln market value and trades at ~17x EPS, a modest discount to consumer packaged goods peers.
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