Kimberly-Clark Reports Sales Climbed 6.5 Percent to a Record $3.6 Billion in First Quarter; EPS From Operations Increased to 84 Cents, a Gain of 5.0 Percent Compared With 2000
Kimberly-Clark Reports Sales Climbed 6.5 Percent to a Record $3.6 Billion in First Quarter; EPS From Operations Increased to 84 Cents, a Gain of 5.0 Percent Compared With 2000 DALLAS, April 23, 2001 – Kimberly-Clark Corporation (NYSE: KMB) today reported that solid volume growth and higher selling prices boosted sales in the first quarter of 2001 to a new quarterly high of $3.6 billion, an increase of 6.5 percent compared with 2000. Excluding currency effects, sales rose more than 9 percent.
The sales gain enabled the company to increase earnings per share from operations, overcoming both currency effects that reduced earnings by approximately 4 cents per share and higher energy costs equivalent to more than 3 cents per share. First quarter earnings from operations of 84 cents per share were up 5.0 percent from 80 cents per share in 2000 and set a new first quarter record.
Including unusual items, diluted net income per share for the first quarter was 81 cents in 2001 compared with 86 cents in 2000, a decrease of 5.8 percent. The unusual items consisted primarily of charges to streamline the company’s feminine and adult care operations in North America in 2001 and proceeds from settlement of a patent dispute in 2000.
Wayne R. Sanders, chairman and chief executive officer of Kimberly-Clark, said, “Our teams have continued to deliver excellent top-line growth and build competitive advantage in a challenging business environment. I’m also pleased with the improvement in our bottom-line results for the quarter in light of the significant negative impact of currency and the spike in energy costs.
“Despite the external pressures, we are continuing to aggressively invest in the future growth of our businesses. In the first quarter, we stepped up our spending to prepare for the launch of Cottonelle Fresh rollwipes, to expand our proprietary UCTAD tissue technology and to grow our global diaper business. Meanwhile, we continued to repurchase shares of our common stock, buying a total of 2 million shares during the quarter.”
Review of first quarter sales by segment
Sales of $3.6 billion for the first quarter were up 6.5 percent compared with 2000. As noted above, excluding currency effects, sales increased more than 9 percent, with improvement in each of the company’s core businesses and in every region of the world. Sales volumes were more than 5 percent higher, while selling prices increased approximately 4 percent. Tissue sales were 6.4 percent greater than in the first quarter of 2000. Excluding currency effects, sales increased more than 9 percent, as higher sales volumes and selling prices both contributed to the improvement. Sales volumes rose approximately 4 percent, driven by increased sales of Cottonelle and Scott bathroom tissue and Huggies baby wipes in North America and continued double-digit growth in Latin America. Selling prices were up 5 percent, primarily due to increases implemented during 2000.
Sales of personal care products rose 6.1 percent compared with the first quarter of 2000, and were also up over 9 percent before currency effects. Sales volumes increased approximately 7 percent and selling prices were 3 percent higher. All geographic regions contributed to the improvement in sales volumes, highlighted by continued strong growth in sales of Huggies diapers, Pull-Ups training pants and DryNites youth pants in Europe, along with double-digit sales volume growth in Asia.
Sales of health care and other products increased 9.2 percent, due mainly to higher sales volumes of surgical and respiratory products and the acquisition of Safeskin Corporation.
Other first quarter operating results
Operating profit in the first quarter of 2001 was $631.1 million, 7.0 percent lower than the prior year. However, excluding unusual items, operating profit rose 5.5 percent to $659.2 million in the first quarter of 2001 compared with $624.6 million in 2000. The increase was achieved despite the impact of significantly higher energy costs in North America, higher raw material costs, particularly for fiber, which is used to make tissue and personal care products, and costs related to the company’s new Cottonelle Fresh rollwipes operations. In addition, weakness of key currencies in Europe, Asia and Latin America tempered first quarter growth in operating profit.
Kimberly-Clark’s share of net income of equity companies in the first quarter decreased to $39.5 million in 2001 from $47.6 million in 2000, due primarily to lower earnings at the company’s equity affiliates in Mexico, Brazil and Australia.
Summary and outlook
Mr. Sanders said, “We delivered excellent top-line growth in the first quarter and solid improvement in earnings per share from operations in the face of significantly higher energy costs and widespread currency weakness. Looking ahead, we have a full pipeline of new and improved products to continue to drive increased sales and build our global franchises. And we will remain focused on translating our top-line growth into solid and sustainable improvement on the bottom line. We will not, however, reduce key strategic investments to offset the near-term challenges from external factors. Our investments this year to launch Cottonelle Fresh rollwipes and to expand our proprietary UCTAD tissue technology will support our future growth and generate outstanding returns.
“At today’s exchange rates, currency will remain a challenge over the balance of this year. And while energy costs in North America should moderate from first quarter levels, they will still be higher than last year. As a result, we expect earnings per share from operations in the second quarter of 2001 will be similar to the first quarter, followed by sequentially improved results in the third and fourth quarters as we realize more benefit from lower fiber costs and cost savings programs.
“For the full year, we expect solid growth in earnings per share from operations, in line with our objective of 6 to 8 percent growth in sales. With a boost from this year’s major investments, we expect our sales momentum will continue in 2002 and that we’ll return to our targeted double-digit rate of growth in earnings per share from operations.”
Conference call
A conference call to discuss this news release and other matters of interest to investors and analysts will be held at 9:00 a.m. (CDT) on Tuesday, April 24. The conference call will be simultaneously broadcast over the World Wide Web. Stockholders and others are invited to listen to the live broadcast or a playback, which can be accessed by following the instructions set out in the News and Financial Information section of the company’s Web site (www.kimberly-clark.com/news/).
Kimberly-Clark Corporation is a leading consumer products company. Its global tissue, personal care and health care brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott, Kimberly-Clark, Safeskin, Tecnol, Kimwipes and WypAll. Other brands well known outside the U.S. include Andrex, Scottex, Page, Popee and Kimbies. Kimberly-Clark also is a major producer of premium business, correspondence and technical papers. The company has manufacturing operations in 41 countries and sells its products in more than 150 countries.
Certain matters contained in this news release concerning the business outlook, including new product introductions, cost savings and acquisitions, anticipated financial and operating results, strategies, contingencies and transactions of the company constitute forward-looking statements and are based upon management’s expectations and beliefs concerning future events impacting the company. There can be no assurance that these future events will occur as anticipated or that the company’s results will be as estimated. For a description of certain factors that could cause the company’s future results to differ materially from those expressed in any such forward-looking statements, see the section of Part I, Item 1 of the company’s Annual Report on Form 10-K for the year ended December 31, 2000 entitled “Factors That May Affect Future Results.”
Description of Business Segments
The Tissue segment manufactures and markets facial and bathroom tissue, paper towels, wipers and napkins for household and away-from-home use; wet wipes; printing, premium business and correspondence papers; and related products. Products in this segment are sold under the Kleenex, Scott, Kimberly-Clark, Kleenex Cottonelle, Kleenex Viva, Huggies, Kimwipes, WypAll, Surpass and other brand names.
The Personal Care segment manufactures and markets disposable diapers, training and youth pants and swimpants; feminine and incontinence care products; and related products. Products in this segment are primarily for household use and are sold under a variety of well-known brand names, including Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend, Poise and other brand names.
The Health Care and Other segment manufactures and markets health care products such as surgical gowns, drapes, infection control products, sterilization wraps, disposable face masks and exam gloves, respiratory products, and other disposable medical products; specialty and technical papers; and other products. Products in this segment are sold under the Kimberly-Clark, Safeskin, Tecnol, Ballard and other brand names.
N.M.–Not meaningful
Unaudited
