latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/kimberly-clark-gets-a-coronavirus-sales-lift-will-resume-share-buybacks-59561029 content esgSubNav
In This List

Kimberly-Clark gets coronavirus sales lift, will resume share buybacks

Video

According to Market Intelligence, December 2022

Blog

Insight Weekly: Layoffs swell; energy efficiency PE deals defy downturn; 2023 global risk themes

Blog

Insight Weekly: Energy crisis cripples Europe; i-bank incomes rise; US holiday sales outlook

Blog

Japan M&A By the Numbers: Q3 2022


Kimberly-Clark gets coronavirus sales lift, will resume share buybacks

The coronavirus pandemic helped to lift Kimberly-Clark Corp.'s results in the second quarter — so much so that the company is expecting 2020 results ahead of pre-pandemic forecasts and restarting share buybacks, executives said July 23.

The maker of Cottonelle toilet paper and Kleenex facial tissues reinstated its outlook in results released before U.S. markets opened, saying it expects adjusted EPS to be up to 10% above its initial projection for 2020. Senior Vice President and CFO Maria Henry also confirmed on a call with analysts that Kimberly-Clark will resume share repurchases of between $700 million and $900 million, which the company had paused earlier in the year due to uncertainty about the pandemic.

The driver has been increased demand for the Texas-based company's products among stay-at-home consumers. In North America, shoppers stocking up on paper goods and fewer discounts on those products at retailers pushed the company's results higher, even as results cratered at its professional business, which provides paper products to public facilities, private offices and similar venues.

"Overall, financially, this should be a really good year for Kimberly-Clark," Henry said. The better-than-forecast first-half results will likely be enough to compensate even if consumer purchases slow in the second half of 2020, she added.

The company is still restoring inventory reserves that it drew down as sales shifted to retailers in the spring, which means that some products remain out-of-stock on store shelves, Chairman and CEO Michael Hsu told analysts. "Our in-stock still isn't where we want it to be," he said.

In some categories, the volume of products sold using a discount, sale or other promotion declined as much as 50% during the quarter, he added.

Sales have not been uniformly rosy everywhere in the world. In Brazil, where coronavirus cases have spiked in recent weeks, consumers tightened their purse strings during the quarter, Hsu said. That led to sales declines in categories like diapers, where Kimberly-Clark has been trying to move beyond value-focused products in favor of ones with premium features.

Still, Brazil and other developing economies have been key testing grounds for the company's digital strategy, the CEO said. The company has taken e-commerce strategies from its business in China and South Korea, which have more developed delivery and pickup infrastructures than many countries in the Americas or Europe, and deployed them in emerging markets as customer purchases in that channel have grown. "Even 18 months ago, nobody was talking e-commerce in Brazil," Hsu said. "It's becoming fairly significant."

E-commerce sales have grown at a 30% rate across the entire company so far in 2020, vice president of investor relations Paul Alexander said on the July 23 call.