Kimberly-Clark (KMB) Q2 2024 (Q&A) earnings summary

Executive summary

• Achieved strong organic sales growth of 5% in Q2 2024 and 4% year-to-date, driven by innovation, volume, and mix improvements, especially in Personal Care and select international markets.

• Adjusted operating profit grew 16% in Q2 and 15% year-to-date; adjusted EPS up 20% in Q2 and 19% year-to-date, reflecting strong cost management.

• 2024 earnings outlook was raised, expecting mid-single-digit organic net sales growth and mid- to high-teens constant-currency adjusted operating profit and EPS growth.

• Transformation Initiative launched to drive growth and reduce costs, with $1.5 billion in pre-tax costs and $3.0 billion in gross productivity savings by 2026.

• Completed divestiture of personal protective equipment business for $640 million.

Financial highlights

• Q2 2024 organic net sales up 5% year-over-year; adjusted operating profit up 16%; adjusted EPS up 20%.

• Q2 adjusted gross margin was 36.9%, up 290 basis points; adjusted operating margin 16.8%.

• Year-to-date sales were $10.2 billion, down 1%, but organic sales grew 5%.

• Adjusted free cash flow reached $1.1 billion year-to-date, on track for $2 billion+ for the full year.

• Cash provided by operations for the first half was $1.5 billion.

Outlook and guidance

• 2024 outlook raised: mid-single-digit organic net sales growth, including ~300 bps from pricing in hyperinflationary economies.

• Adjusted operating profit and EPS now expected to grow at a mid- to high-teens percentage rate on a constant-currency basis.

• Reported results will be negatively impacted by currency translation and divestitures.

• Full-year capital spending anticipated at approximately $800 million.

• Full-year adjusted effective tax rate projected at 23%-24%.