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Kimberly-Clark 2Q 2020 Results: Net Income up 40 percent from Year ago to $692 Million

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Kimberly-Clark has reported second quarter 2020 results.

Second quarter 2020 net sales of $4.6 billion increased slightly compared with the year-ago period, including organic sales growth of 4 percent.

The company is restoring financial guidance for full-year 2020 and restarting its share repurchase program after temporarily suspending both in April due to the uncertainty related to the COVID-19 pandemic.

Net sales in 2020 are expected to increase 1 to 2 percent year-on-year, including organic sales growth of 4 to 5 percent.

Chairman and CEO Mike Hsu said, "We continue to focus on protecting the health and safety of our employees and consumers and operating our supply chain with excellence to meet the needs of our consumers and customers during this unprecedented time period. I am extremely proud of how our teams are managing these near-term operating priorities. At the same time, our underlying business momentum is good, our market share positions are healthy overall and we are delivering excellent financial results."

Hsu continued, "We achieved very good organic sales growth and all-time record adjusted earnings and cash flow in the second quarter. We also delivered significant cost savings, helping us achieve strong margin improvements. While the environment remains uncertain, visibility has improved from three months ago and we are restoring forward-looking guidance. We have increased our 2020 outlook for organic sales and earnings compared to our original plan. We are also further increasing our growth investments to position us for future success. We continue to execute well, operate our business with a balanced approach and remain very optimistic about our opportunities to create shareholder value."

In the Consumer Tissue Segment, second quarter sales of $1.6 billion increased 12 percent. Volumes increased 14 percent and net selling prices rose 1 percent, while product mix was unfavorable by 1 percent. Changes in currency rates reduced sales approximately 3 percent. The volume increase was driven by increased shipments in North America and developed markets to support higher consumer and customer demand related to the global outbreak of COVID-19. Second quarter operating profit of $428 million increased 94 percent. Results benefited from organic sales growth, cost savings and lower input costs. The comparison was impacted by increased advertising spending and unfavorable currency effects.

For the first six months of 2020, sales of $9.6 billion increased 4 percent. Organic sales increased 7 percent, as volumes rose 5 percent and net selling prices and product mix each improved 1 percent.

In January 2018, Kimberly-Clark initiated the 2018 Global Restructuring Program in order to reduce the company's structural cost base and enhance the company's flexibility to invest in its brands, growth initiatives and capabilities critical to delivering future growth. As part of the program, Kimberly-Clark expects to exit or divest some low-margin businesses that generate approximately 1 percent of company net sales.

The restructuring is expected to be completed in 2021, with total restructuring charges to implement the program expected to be toward the high end of the range of $1,700 to $1,900 million pre-tax ($1,300 to $1,400 million after tax). The company expects the program will generate annual pre-tax cost savings of $500 to $550 million.


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