My Account Help Log In HOME PREMIUM SERVICES FREE E-LETTERS INVESTING TOPICS INVESTING EXPERTS FREE REPORTS Kimberly-Clark Cleans Up By THOMAS SCARLETT on JULY 17, 2014 The economic news continues to be mixed. On Thursday morning, the government reported that new jobless claims fell to 302,000 (good news) but also that housing starts had hit their lowest level since September 2013 (bad news). Also, Microsoft (NASDAQ: MSFT) announced that it will cut up to 18,000 jobs over the next year. In ambiguous times, big companies that have established brand loyalty in the consumer staples market are a reliable choice for investors. Kimberly-Clark (NYSE: KMB) was founded way back in 1872, making it one of the oldest large corporations still operating in America. But its market position is as strong as ever. Economists like to talk about the “elasticity” of demand. In plain English, which products are so essential that consumers will keep paying for them even as they’re cutting back in other areas? Well, no matter how tough economic conditions get, people will keep buying tissues, toilet paper, diapers and feminine hygiene products, and that’s where Kimberly-Clark makes its money. Kimberly-Clark owns the trademark on Kleenex, one of those products that is so widely used its name has become a synonym for the product itself. This trademark is zealously defended by the company’s lawyers, who once filed suit against a punk rock band that called itself Kleenex. Other very well-known brand names owned by KMB are Huggies (diapers and baby wipes), Depends, Kotex, Scott toilet paper, and Pull-Ups. The company now operates through four segments: Personal Care, Consumer Tissue, K-C Professional, and Health Care. The stock currently has a dividend yield of 3 percent and a price-earnings ratio of around 20. Despite tough competition from Procter and Gamble, KMB has maintained and expanded its market share in its key segments. Kimberly-Clark will be making its largest structural change in years in a few months, when it spins off its health care division as a separate company. The health care segment had been the smallest of the company’s divisions and was somewhat out of step with the others, which rely on heavy advertising and brand loyalty of supermarket-type products. A spin-off would create a stand-alone, publicly traded health care company with approximately $1.6 billion in annual net sales and leading market positions in both surgical and infection prevention products and medical devices. We think this change will add to the company’s long-term profitability. Back in April Kimberly-Clark reported its first quarter 2014 results and confirmed its previous guidance for full-year 2014 adjusted earnings per share. First quarter 2014 net sales of $5.3 billion decreased 1 percent, compared to the year-ago period. Earnings per share for the first quarter were $1.41 in 2014, up slightly on a year-over-year basis. CEO Thomas Falk said, “We delivered a solid first quarter with good organic sales growth and cost savings. We also launched a number of product innovations and made further progress with targeted growth initiatives. We continue to allocate capital in shareholder-friendly ways, as our first quarter dividends and share repurchases totaled three-quarters of a billion dollars. And although we face continued headwinds from currency exchange rates and cost inflation, we’re maintaining our full-year guidance for adjusted earnings per share. We continue to be optimistic about the opportunities we have to drive profitable growth and generate attractive returns to shareholders.” Total selling, general and administrative expenses were below prior-year levels, driven by lower administrative costs. Input costs increased $65 million overall, with $35 million of increased costs for raw materials other than fiber, $20 million of higher fiber costs and $10 million of higher distribution and energy costs. Foreign currency translation effects, as a result of the weakening of several currencies relative to the U.S. dollar, reduced operating profit overall by $30 million. Cash provided by operations in the first quarter of 2014 was $437 million compared to $607 million in 2013. The decrease was driven by higher pension contributions and increased working capital. The company decided a few years ago to try to increase its presence in Europe and other international markets, and this approach seems to be paying dividends. Sales on international side increased 3 percent in the first quarter, despite a 9 point negative impact from changes in currency rates. Sales volumes were up 10 percent and net selling prices improved 3 percent. Volumes increased in China, Russia, Vietnam and throughout most of Latin America, including Brazil and Venezuela. Kimberly-Clark’s market cap is now around $43 billion. It will be reporting second-quarter earnings in less than seven days. If the report beats expectations, as it seems likely to do, the stock price could hit a new high. Tom Scarlett is an investment analyst at Personal Finance. 5 Dividend Stocks to Get You Through Anything If you’re nervous about the stock market, this is one report you need to see. You can buy these mattress stuffers and stop fretting about which way the market is heading next. One of them has been handing investors profits for decades. With each passing day, this company is extending its lead over rivals in reliability, capacity and speed. This top pick has consistently raised its generous dividend for the last 25 years...and the best is yet to come. Get the name of these 5 stocks right now and receive a free subscription to Investing Dailys Stocks to Watch e-letter! Send me my FREE Report We value your privacy. Unsubscribe at any time. Email Stock Talk — Post a comment Comment Guidelines You must be logged in to post to Stock Talk OR create an account. ABOUT THE ANALYST Thomas Scarlett Analyst Bio | Archives Tom Scarlett has more than 20 years of experience as a business and financial journalist. He covered all aspects of the investment world for Personal Finance and Utility Forecaster, and has served as the managing editor of Forecasts and Strategies and Successful Investing. Tom has also reported on a diverse array of economic and political issues for such publications as Trial Magazine, Money Managers Compliance Guide, Indoor Environment Connections and Inside Mortgage Finance. He is a graduate of Georgetown University Law School. Tom lives in Rockville, Md. with his wife and son. show more Send me my free report We value your privacy Get Quote Name Last Change % Dow 16976.81 -161.39 (-0.94%) Nasdaq 4363.45 +0.00 (+0.00%) S&P 500 1958.12 -23.45 (-1.18%) NYSE 10890.44 +0.00 (+0.00%) Gold 1316.30 -0.60 (-0.05%) Oil 103.65 +0.46 (+0.45%) Quotes delayed at least 20 mins. MORE ARTICLES Related Recent Full Steam Ahead for Enterprise 2 DAYS AGO Send Your Portfolio into Orbit 3 DAYS AGO Revealed: Our Stock of the Month for July 2014 4 DAYS AGO Big Money in Plastic 1 WEEK AGO Honeywell’s Sweet Spot 1 WEEK AGO LATEST STOCK TALK Why Crude’s at Home in Triple Digits James Putman 2 days ago Why Crude’s at Home in Triple Digits Robert Rapier 2 days ago 2 Canadian Oil Sands Stocks to Watch Jim Pearce 2 days ago Why Crude’s at Home in Triple Digits James Putman 4 days ago 2 Canadian Oil Sands Stocks to Watch Robert Erber 5 days ago See more recent Stock Talk FREE REPORTS Best Undervalued Stocks to Buy Now Top 3 High Yield REITs Options Trading Strategies to Reduce Risk and Enhance Returns Top Growth Stocks to Own Now 8 Best Asian Stock Market Picks Investing in Uranium: Our #1 Uranium Stock Master Limited Partnerships: Best MLP Investments to Own Now Canadian Income Trusts after the 2011 Conversion: Big North of the Border Dividends 5 High Yield Stocks that Pay Dividends Home | Events | Privacy Policy | Terms and Conditions About Us | White List | Contact Us | Media Inquiries Investing Daily is not a registered investment advisor or broker/dealer. All information provided on the Investing Daily network of websites is provided as-is and does not represent personalized investment advice. These sites do not constitute a representation by the publisher or a solicitation for the purchase or sale of securities. All opinions provided are based on sources believed to be reliable and are written in good faith, but no warranty or representation, expressed or implied, is made as to their accuracy. There are risks associated with any investment and we strongly encourage readers to supplement the information in these articles, special reports, and newsletters with independent research and other professional advice before investing in any security. Copyright © 2014 Investing Daily, a division of Capitol Information Group, Inc. All rights reserved. Full Site
Posted on: Fri, 18 Jul 2014 04:25:46 +0000
Trending Topics
Recently Viewed Topics
© 2015