=Kimberly-Clark (KMB) reported earnings on Wed 23 Jan 2019 (b/o)

Kimberly-Clark misses by $0.06, beats on revs; guides FY19 below consensus; announces K-C Strategy 2022 medium-term financial objectives 

• Reports Q4 (Dec) earnings of $1.60 per share, excluding non-recurring items, $0.06 worse than the S&P Capital IQ Consensus of $1.66; revenues fell 0.7% year/year to $4.57 bln vs the $4.47 bln S&P Capital IQ Consensus. Changes in foreign currency exchange rates reduced sales by 4%. Organic sales increased 3%, as net selling prices improved 3%. Organic sales declined 1% in the year-ago period. In North America, organic sales increased 6% in K-C Professional, and 3% in consumer products compared to a 3% decline in the base period. Outside North America, organic sales rose 4% in developing and emerging markets and were even year-on-year in developed markets.
• Co issues downside guidance for FY19, sees EPS of $6.50-6.70, excluding non-recurring items, vs. $6.78 S&P Capital IQ Consensus; sees FY19 revs of down 1-2% to ~$18.12-18.30 bln vs. $18.3 bln S&P Capital IQ Consensus. Foreign currency exchange rates unfavorable by 3 to 4%. Exited businesses in conjunction with the 2018 Global Restructuring Program expected to reduce sales slightly, mostly in K-C Professional. Organic sales increase of 2%, driven by higher net selling prices of at least 3%. Adjusted operating profit growth of 1 to 4%.
• K-C Strategy 2022:
  • The company will target to grow sales in-line with, or slightly ahead of, category growth rates. Kimberly-Clark's three growth pillars are to elevate core businesses, accelerate growth in D&E markets and drive digital marketing and e-commerce. The company expects to achieve these pillars by launching differentiated product innovations, driving category development and leveraging commercial capabilities in sales and marketing.
  • The company will generate savings in order to fund growth initiatives and improve margins. Focus areas will include driving ongoing supply chain productivity improvements through the FORCE program, executing the 2018 Global Restructuring Program, rigorously controlling discretionary spending to sustain the company's top-tier overhead cost structure and driving further improvement in working capital.
  • The company will allocate capital in value-creating ways, enabled by strong cash generation. Kimberly-Clark expects to spend capital at an annual rate of 4 to 5% of net sales after completing the 2018 Global Restructuring Program. In addition, the company plans to return significant amounts of cash to shareholders through dividends and share repurchases.
• The company's medium-term financial objectives associated with K-C Strategy 2022 assume that category growth remains relatively modest and similar to recent conditions. The objectives are as follows:
  • Sales and organic sales growth - 1 to 3% annually.
  • Adjusted earnings per share growth - mid-single digits annually.
  • Adjusted Return On Invested Capital - at least maintain at current level.
  • Dividend growth - generally in line with adjusted earnings per share growth.