Inflation Hampers Kimberly-Clark’s Q3 Results

Kimberly-Clark Corporation on Monday (Oct. 25) reported that its fiscal 2021 third-quarter net sales were up 7% to $5 billion, compared to the same time in 2020, and that organic sales had grown 4% in that same time frame.

Still, the company says it’s likely to see full-year organic sales drop 1 to 2%, largely because of higher input cost inflation and the ongoing supply chain snafus that are hampering all sectors.

“Our third-quarter results reflect a dynamic and challenging macro environment,” said Chairman and Chief Executive Officer Mike Hsu in the company announcement. “Our organic sales were strong, including double-digit growth in a number of our personal care markets, and improving performance in tissue and our professional business.

“Market share performance also remained strong, demonstrating the strength of our innovation and excellent local commercial execution. Our earnings were negatively impacted by significant inflation and supply chain disruptions that increased our costs beyond what we anticipated,” he said.

Kimberly-Clark is enacting “additional pricing and enhanced cost management” to deal with the increased costs, said Hsu, noting “it is becoming clear they are not likely to be resolved quickly.”

“We will continue to invest in our brands and capabilities as we navigate through this volatile and difficult macro environment” he said. “Our strategy is working, and we remain confident in our future and our ability to create long-term shareholder value.”

Organic sales jumped 3% in consumer products and 16% in K-C Professional across North America, while organic sales rose 6% in developing and emerging markets and were even in developed markets compared to the same time in 2020.

Operating profit in the third quarter was $657 million in 2021, down from $666 million in 2020, with higher input costs from pulp and polymer-based materials, distribution and energy costs.

For the first nine months of 2021, Kimberly-Clark sales are up 1% to $14.5 billion.

Related: Pandemic Stockpiles Deflate Kimberly-Clark Q2 Earnings

Kimberly-Clark’s second-quarter net sales of $4.7 billion were up 2% over the same period in 2020, but organic sales fell in the quarter by 3%.

Kimberly-Clark’s personal care segment was up 13% to $2.5 billion in Q2, while the consumer tissue segment dropped by 13% year-over-year to $1.4 billion. During that time frame, the K-C Professional segment was up 6% to $800,000.