Analysts were expecting sales to come in at $4.58 billion and adjusted earnings to increase marginally to $1.61 per share. Kimberly-Clark surpassed street estimates on both the headline numbers, which is a good sign for investors.
Commenting on the Q2 performance, CEO Hsu said, “We made excellent progress in the second quarter. We delivered strong organic sales growth, gross margin improvement and higher earnings per share.”
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As part of the Global Restructuring Program, the company recorded $119 million as pre-tax restructuring charges. The program was kick-started last year where Kimberly-Clark plans to move away from low-margin business and focus on brands with higher potential which would improve margins in the long term.
On the segment performance, Personal Care operating profit improved 5% due to price increase and growth in volumes. Consumer Tissue division saw 7% growth in operating profit mainly driven by cost savings and hike in prices offset by 2% drop in volumes.
Bullish
Outlook
Kimberly-Clark has lifted its full-year 2019 forecast backed by the improved macros. The company now expects sales to be flat to down 1% compared to the prior outlook of negative 1-2%. Organic sales to increase by 3%, an increase of 1% from the outlook provided in the Q1 period.
Adjusted EPS is revised upwards to $6.65-6.80, up 15 cents from the earlier guidance of $6.50 to $6.70. It’s worth noting that analysts are expecting sales to decrease modestly to $18.41 billion and earnings per share to increase 1.6% to $6.72.
Kimberly-Clark’s peers Colgate-Palmolive (NYSE: CL) is scheduled to report its Q2 earnings on July 26 while Procter & Gamble (NYSE: PG) is slated to report its Q4 earnings next Tuesday (July 30).