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Kimberly-Clark boosts profit target for third time as price hikes pay off

FILE PHOTO: The logo of Kimberly-Clark is seen in Maracay
April 26, 2024
Reuters - Reuters

(Reuters) - Kimberly-Clark lifted its annual profit forecast for the third time this year after its quarterly profit beat estimates on Tuesday, 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 labor 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.

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%.

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, while analysts on an average had expected sales of $5.15 billion.

(Reporting by Juveria Tabassum and Granth Vanaik in Bengaluru; editing by Milla Nissi)

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