Kimberly-Clark Soars on Strong 1Q Sales, Upholds 2022 Guidance

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Kimberly-Clark Soars on Strong 1Q Sales, Upholds 2022 Guidance
Credit: © Reuters.

By Geoffrey Smith -- Kimberly-Clark (NYSE: KMB ) stock soared on Friday after the maker of consumer hygiene products reported a stronger-than-expected first quarter, suggesting it has mostly succeeded in passing on higher input costs to customers.

By 10:30 AM ET (1430 GMT), Kimberly-Clark stock was up 9.3%, on course for its best week since the start of the pandemic, when the first lockdowns forced stockpiling of essential household items such as toilet tissue and diapers.

The maker of Huggies and Andrex said sales rose 7% on the year to $5.1 billion, despite a 2% headwind from adverse foreign exchange movements. Organic sales rose 10%, as the company raised its net selling prices by an average of 6% from a year earlier. Sales also rose 2% by volume, while the sales mix also delivered a 2% improvement. Growth was particularly strong in North America, where organic sales rose 13%.

The strength of the first quarter led Kimberly-Clark to upgrade its organic sales forecast for the year. It now sees growth of between 4% and 6%, compared to a range of 3-4% earlier.

The company upheld its prior guidance of between $5.60 and $6 a share for adjusted net earnings this year, suggesting that the stock is trading at a multiple of around 24 times earnings after Friday's big move.

Despite the relatively strong sales report, Kimberly-Clark's profit weakened from a year earlier, as the company was unable to escape completely the effects of input price inflation. Underlying operating profit fell to $629 million in 2022 from $804 million a year ago, as higher costs for pulp and polymer-based materials, as well as distribution and energy, added $470 million to input costs. For the full year, it now expects such factors to add around $1.2 billion to operating costs, up from a previous estimate of around $825 million.

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