Kimberly-Clark (NYSE:KMB), the multinational personal care corporation, reported robust results for Q3 2023, with organic sales growing by 5% and a 2% volume growth in the Personal Care segment. The company also improved its gross margin by 530 basis points, surpassing 2019 levels. In light of these results, Kimberly-Clark has raised its full-year outlook, forecasting a 4% to 5% growth in organic sales and a 15% to 17% increase in adjusted earnings per share.
Key takeaways from the earnings call include:
- The company saw market share gains in North America, the U.K., and China.
- Investments in innovative products and technology were highlighted as key to meeting consumer needs.
- Commodity costs are expected to provide a modest tailwind going forward.
- Company executives expressed confidence in further margin expansion through disciplined commercial programming, innovation, and cost management.
- The company's pricing strategy was discussed, with executives stating that they have adjusted pricing in certain markets based on cost changes and will continue to do so where it makes sense.
During the call, executives discussed their business strategies, including their efforts to expand margins through revenue and cost management. The robust consumption in North America was noted, with solid growth across all categories in the Personal Care division. This growth was attributed to higher shipments to retailers replenishing their inventories after facing supply constraints earlier in the year.
The executives also touched on the positive impact of lower input costs on gross margins and highlighted their cost savings program, FORCE. They stated that they expect commodities to be down in the next quarter but are mindful of the volatility in oil markets and currency fluctuations.
Regarding their pricing strategy, executives stated that they view trade promotion as a way to drive trial and have taken pricing faster than other brands. They expressed confidence in further margin expansion through disciplined commercial programming, innovation, and cost management. They also discussed their investment strategy, stating that they have made significant progress in building capabilities and innovation pipelines.
Kimberly-Clark executives also addressed manufacturing cost inflation, which was driven by service and lease inflation, and hyperinflationary economies outside the US. Finally, regarding carryover pricing into 2024, they expect some pricing to carry over but do not foresee it being a major driver. They believe they have priced appropriately for the anticipated cost environment.
The company also highlighted its strategy of driving innovation and commercial programming while maintaining a competitive spend. It plans to continue investing in advertising but does not feel the need for a significant catch-up spend and will focus on driving competitive innovation. Kimberly-Clark expressed satisfaction with their balanced and sustainable growth and thanked participants for their interest.
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