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KIMBERLY CLARK CORP (KMB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered organic sales growth of 2.3% on $4.928B net sales, with volume (+1.5%), price (+0.6%) and mix (+0.1%) gains; adjusted EPS was $1.50 and reported EPS was $1.34, reflecting transformation-related charges and lower equity income .
  • Adjusted operating profit rose to $684M (+2.1% YoY) despite currency translation (-1.8 pts) and divestiture (-1.8 pts) headwinds; adjusted gross margin was 35.4% (+50 bps YoY) on strong productivity .
  • 2025 outlook guides constant-currency mid-to-high single-digit adjusted EPS growth; reported EPS headwinds include FX (-350–400 bps), divestitures and US private label diaper exit (-320 bps) and below-OP items (-100 bps) .
  • Dividend raised 3.3% to $1.26 per share (53rd consecutive annual increase), reinforcing capital return commitment .

What Went Well and What Went Wrong

What Went Well

  • Productivity and margin: Adjusted gross margin expanded to 35.4% (+50 bps YoY) on strong productivity gains; adjusted operating profit reached $684M (+2.1% YoY) even with FX and divestiture headwinds .
  • Segment resilience: IPC operating profit +36.0% YoY on lower monetary losses in hyperinflationary economies and favorable pricing; IFP operating profit +30.9% YoY on productivity and volume .
  • Strategic tone: “2024 was a breakthrough year… rewiring our organization into three powerhouse segments… we established a strong foundation to accelerate our strategy in 2025 and beyond” — Mike Hsu, CEO . “We’re bullish on our ability to continue powering investment and bottom line growth with industry-leading productivity and SG&A savings” — Hsu .

What Went Wrong

  • Reported profitability: Operating profit fell to $548M (-18.2% YoY) and reported diluted EPS to $1.34 (-10.7% YoY), driven by transformation charges and lower equity income; net interest expense rose to $53M (+39.5% YoY) on lower interest income .
  • North America margin pressure: NA Q4 operating profit declined 10.0% YoY on double-digit marketing increases, capability spend, temporary supply chain disruptions, and unfavorable pricing net of cost inflation timing .
  • FX and divestitures: Currency translation reduced Q4 sales by ~1.7% and PPE divestiture reduced sales by ~1.4%; consolidated net sales -0.8% YoY despite positive organic growth .

Financial Results

Consolidated Financials (Q2–Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$5.029 $4.952 $4.928
Diluted EPS ($)$1.61 $2.69 $1.34
Adjusted EPS ($)$1.96 $1.83 $1.50
Gross Margin % (reported)36.0% 36.0% 34.0%
Adjusted Gross Margin %36.9% 36.7% 35.4%
Operating Profit ($USD Millions)$655 $1,154 $548
Adjusted Operating Profit ($USD Millions)$845 $810 $684
Effective Tax Rate (reported)15.1% 20.5% 14.8%
Adjusted Effective Tax Rate20.9% 22.7% 25.2%

Segment Breakdown – Q4 2024

SegmentNet Sales ($USD Millions)YoY %Operating Profit ($USD Millions)YoY %
North America (NA)$2,722 -0.5% $548 -10.0%
International Personal Care (IPC)$1,375 -1.3% $155 +36.0%
International Family Care & Professional (IFP)$831 -1.2% $89 +30.9%

Key KPIs – Q4 2024

KPIConsolidatedNAIPCIFP
Organic Sales Growth (%)2.3% 1.1% 5.3% 0.7%
Volume contribution (%)+1.5% +1.9% +0.9% +1.0%
Net Price (%)+0.6% -0.8% +4.1% -0.5%
Mix (%)+0.1% — +0.3% +0.2%
Currency translation impact on sales (%)-1.7% -0.1% -6.4% +0.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Sales Growth (Enterprise)FY 2025N/AOutpace categories growing ~2% New
Reported Net Sales – FX impactFY 2025N/A-300 bps New
Reported Net Sales – PPE divestiture & US private label diapers exitFY 2025N/A-240 bps New
Adjusted Operating Profit (constant currency)FY 2025N/AHigh single-digit growth New
Adjusted Operating Profit – divestiture/exit impactFY 2025N/A-320 bps New
Operating Profit – FX impactFY 2025N/A-300 bps New
Adjusted EPS (constant currency)FY 2025N/AMid-to-high single-digit growth New
Adjusted EPS – divestiture/exit impactFY 2025N/A-320 bps New
EPS – FX impactFY 2025N/A-350–400 bps (incl. equity income) New
Below Operating Profit itemsFY 2025N/A-100 bps (higher net interest, higher adjusted tax rate, lower shares, etc.) New
Quarterly Dividend per ShareQ1 2025 payout$1.22 $1.26 payable Apr 2, 2025 Raised

Earnings Call Themes & Trends

TopicQ2 2024 (Previous Mentions)Q3 2024 (Previous Mentions)Q4 2024 (Current Period)Trend
Pricing/PNOC disciplinePrice +2%; adjusted OP growth with favorable pricing net of cost; shift to volume+mix in D&E “Relatively neutral pricing net of cost”; adjusted OP +5% despite FX; PPE sale impact 2025 pricing largely flat; PNOC targeted neutral; growth volume/mix-led; hyperinflationary pricing taper (Argentina ~30 bps in 2025 vs ~300 bps 2024) Pricing fading; mix/volume primary
ProductivityStrong momentum; adjusted GM 36.9% (+290 bps YoY) Strong gross productivity gains; adjusted GM 36.7% (+90 bps YoY) 2024 productivity ~5.9%; 2025 target ~5%; SG&A savings ~$200M over 2025–2026 Structural savings scaling
Supply chainSupply improvements aiding Personal Care volume Ongoing supply chain investments NA OP hit by temporary supply chain disruptions; 2025 acceleration in network optimization/automation Near-term disruption; longer-term efficiency
FX & currency~5% negative impact on reported sales ~3–4% negative impact on reported sales Q4 sales -1.7% from FX; 2025 EPS -350–400 bps FX headwind Persistent headwind
Volume growth & regional mixNA Personal Care volume +4%; D&E volume/mix + NA organic sales -1%; Developed Markets price lapping IPC volume growth in China double-digit; NA volume +1.9% Broadening, China strength
Trade inventory phasingNA retailer destock pressured Consumer Tissue Destock and PPE divestiture drove mixed phasing 2024 destock ~-60 bps to sales; 2025 tailwind <+40 bps if shipments align with offtake Normalizing

Management Commentary

  • Strategic posture: “We rewired our organization into 3 powerhouse segments… pivoted to volume plus mix driven growth… established a new phase of margin expansion in 2024” — Mike Hsu .
  • Pricing outlook: “2025… pricing is… largely flat… growth is really going to be volume and mix-led” — Nelson Urdaneta .
  • SG&A and investment: “Expect ~$200M of SG&A savings to kick in over 2025–2026… operating margins to grow ahead of gross margins” — Nelson Urdaneta .
  • Cost/PNOC discipline: “Costs remain relatively muted and manageable… around a $200M level… teams to manage pricing net of cost neutral” — Urdaneta .
  • Market expansion: “Huggies was up 200 bps in China… Andrex up 100 bps in UK… Kleenex up ~400 bps in UK and US… diapers in South Korea up ~400 bps” — Hsu .

Q&A Highlights

  • 2025 growth drivers: Management emphasized minimal pricing contribution with volume/mix-led growth, aided by share gains and rewiring to scale the global playbook faster .
  • Productivity cadence: 2024 delivered ~5.9% productivity; 2025 planned ~5% with enhanced cost visibility via strategic supplier relationships and risk management .
  • PNOC and margins: PNOC targeted neutral over time; 2025 gross margin expansion expected at a slower pace vs 2023–2024 as productivity is partly reinvested in network optimization and automation; OP margin expansion ahead of gross margin on SG&A leverage .
  • Phasing/inventories: 2024 trade destock impacted organic growth (~60 bps); 2025 should see <+40 bps tailwind assuming shipments align with consumption; 2025 profits expected to be more evenly distributed H1/H2 .
  • Regional dynamics: IPC strength in China; discipline in selecting investment markets (e.g., Nigeria exit); Professional poised for improvement despite prior washroom softness in NA .

Estimates Context

  • Consensus comparison: S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at time of retrieval due to API request limits; therefore, we cannot assess beats/misses versus Street for this quarter. Values retrieved from S&P Global.
  • Actuals: Adjusted EPS $1.50; revenue $4.928B; adjusted operating profit $684M; organic sales growth 2.3% .
  • Implications: Company’s 2025 constant-currency guide (mid-to-high single-digit adjusted EPS growth) suggests Street models may need to incorporate substantial FX drag (-350–400 bps), divestiture/exit impacts (-320 bps), and SG&A savings ramp (~$200M over two years) .

Actual vs Consensus (Q4 2024)

MetricActualConsensusOutcome
Revenue ($USD Billions)$4.928 Unavailable (S&P Global request limit)N/A
Adjusted EPS ($)$1.50 Unavailable (S&P Global request limit)N/A

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix/volume-led growth is replacing pricing as the primary top-line driver; expect muted pricing and neutral PNOC, with productivity and SG&A savings powering margin expansion in 2025 .
  • FX and portfolio actions will materially reduce reported figures (EPS FX -350–400 bps; net sales FX -300 bps; divestiture/exit headwinds -240 to -320 bps), requiring careful translation from constant-currency guidance to reported outcomes .
  • North America margin pressure in Q4 was transitory (supply chain disruptions, elevated marketing); rewiring and automation/network optimization projects should support improved utilization and margin trajectory .
  • IPC momentum (China double-digit volume, pricing in hyperinflation) and IFP productivity gains diversify profit sources beyond NA; watch currency exposure in IPC .
  • Capital returns remain robust: dividend increased to $1.26, buybacks totaled $1.0B in 2024, with total shareholder returns of $2.6B; balance sheet modestly delevered ($7.4B debt vs $8.0B in 2023) .
  • Near-term trading: Stock narrative likely tied to visibility on SG&A savings ramp, sustained productivity delivery (~5%), and confirmation of volume/mix-led share gains; FX prints could overshadow constant-currency progress .
  • Medium-term thesis: Powering Care transformation, segment rewiring, and integrated margin management offer structurally higher efficiency and reinvestment capacity, with innovation-led share gains across key markets (US/China/UK/South Korea) .