Kimberly-Clark Corporation (NYSE: KMB) is set to report its fourth-quarter 2019 earnings results on Thursday before the market opens. The bottom line is likely to be benefited by the sale of certain facilities and related real estate as part of the restructuring while the top line could be hurt by foreign exchange rates and lower volumes.
The company is expected to disclose strong margin improvement and adjusted earnings growth despite increasing brand investment. The company continues to remain on track with its overall capital plan and continue returning cash to shareholders.
The additional investments in the company’s brands particularly in digital marketing could increase the advertising expenses for the quarter. Kimberly-Clark has started to invest in improving its commercial capabilities for driving future growth in the third quarter with most of the investments occurring in the fourth quarter.
The currencies remained volatile in the forward rates during the end of October 2019 and this implied headwinds this year, especially in Latin America. In general, the global economic conditions suggested that going forward the growth is could slow as the year progresses.
Analysts expect the company’s earnings to increase by 6.20% to $1.70 per share while revenue will decline by 0.70% to $4.54 billion for the fourth quarter. The company has surprised investors by beating analysts’ expectations thrice in the past four quarters. The majority of the analysts recommended a “hold” rating with an average price target of $139.21.
For the third quarter, Kimberly-Clark posted a 49% jump in earnings driven by a gain on the sale of a manufacturing facility as part of the restructuring. The top line was hurt by the changes in foreign currency exchange rates and business exits in conjunction with the 2018 global restructuring program. Net selling prices rose 4% and product mix improved 1%, while volumes fell 1%.
For the full year 2019, the company expects net sales to be down slightly year-over-year and adjusted earnings in the range of $6.75-6.90 per share. As part of the restructuring program implementation, the company expects to incur total restructuring charges of $1.35-1.5 billion after-tax by the end of 2020 with $300-345 million are likely in 2019.
Listen to on-demand earnings calls and hear how management responds to analysts’ questions