Kimberly-Clark Experiences Second Quarter Outcomes, Affords Recommendation – Commodity Commentary

Kimberly-Clark Corp. launched its second quarter 2021 outcomes on Friday and supplied recommendation.

Provide chain disruption:

“We’ve additionally skilled incidents of provide chain disruption and elevated foreign money and commodity volatility,” the corporate mentioned.

Targets:

The corporate is now concentrating on a 0% to 2% drop in natural gross sales for the total yr 2021 and adjusted earnings per share of $ 6.65 to $ 6.90. The earlier outlook was 0% to 1% natural gross sales development and adjusted earnings per share of $ 7.30 to $ 7.55.

“The up to date earnings outlook displays considerably greater enter value inflation and decrease gross sales volumes, partially offset by further value financial savings and decreased discretionary spending,” the corporate mentioned.

The CEO says the 2T displays the volatility that’s inflicting a pandemic:

“Our second quarter displays the continued volatility induced by the pandemic. We face considerably greater enter prices and a reversal in tissue volumes from the report development of the earlier yr, as shoppers and retailers in North America continued to chop again private and retail stock, ”mentioned Chief Government Officer Mike Hsu.

“As we stay up for a return to a extra normalized atmosphere, now we have taken decisive steps to take pricing motion to mitigate inflationary headwinds and proceed to prudently handle prices.”

The KC 2022 technique continues:

“We’ll proceed to execute the KC 2022 technique,” Hsu mentioned. “Whereas our up to date outlook displays a more difficult short-term atmosphere, we’re taking the suitable motion and stay assured in our methods to create long-term shareholder worth. “

The 2018 world restructuring program continues:

In January 2018, Kimberly-Clark launched the 2018 World Restructuring Program “to scale back the corporate’s structural value base and enhance the corporate’s flexibility to spend money on its manufacturers, development initiatives and core capabilities. its future development ”.

As a part of this system, Kimberly-Clark plans to tug out or divest sure low-margin companies that generate about 1% of the corporate’s web gross sales.

Deliberate restructuring accomplished in 2021:

The restructuring is anticipated to be accomplished in 2021. The corporate mentioned it expects this system to generate pre-tax annual value financial savings of $ 540 million to $ 560 million by the tip of 2021.

2021 outlook and planning assumptions:

The corporate has up to date the planning and orientation assumptions for the yr 2021:

Web gross sales enhance from 1% to 4%, prior assumption of three% to five%. Favorable foreign money change charge between 1% and a pair of%, no change.

The acquisition of Softex Indonesia is anticipated to extend gross sales by 2% in 2021, whereas exit actions along side the 2018 world restructuring program are anticipated to scale back gross sales barely, unchanged.

Adjusted working revenue is anticipated to say no from 11% to 14% yr on yr, the earlier assumption falling from 3% to six%, in keeping with the corporate.

Value financial savings of $ 520-560 million, of which $ 400-420 million from the FORCE program and $ 120-140 million from the 2018 World Restructuring Program, the earlier estimate was whole financial savings of 460-520 tens of millions of {dollars}.

Fairness web revenue just like barely decrease yr over yr, earlier outlook just like considerably greater.

Share buyback:

Share buyback in 2021 of $ 400 million to $ 450 million, earlier outlook of $ 650 million to $ 750 million, the corporate mentioned.

Write to Matt Walker at [email protected]

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