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Kimberly-Clark 4Q 2020 results: Tissue Volume Increased by 9 Percent
Chairman and CEO Mike Hsu said, "In 2020, we grew organic sales 6 percent, with healthy underlying performance and increased demand because of COVID-19. We also significantly increased brand investments and improved our market share positions. In addition, we achieved $575 million of cost savings and returned $2.15 billion to shareholders through dividends and share repurchases. Finally, we grew adjusted earnings per share 12 percent, well above our medium-term objective. I'm extremely proud of what our teams accomplished while staying relentlessly focused on employee health and safety and meeting the needs of our consumers during this unprecedented time period." Hsu continued, "Going forward we will continue to execute K-C Strategy 2022. We expect to further improve our market positions by building on our current momentum and leveraging our enhanced commercial capabilities. At the same time, we will continue to operate with financial discipline. We expect more challenging category conditions and higher commodity costs in 2021. That said, we remain very optimistic about our strategies to deliver balanced and sustainable growth over time and create long-term shareholder value." CONSUMER TISSUE SEGMENT Fourth quarter sales of $1.7 billion increased 14 percent. Volumes increased 9 percent and net selling prices rose 6 percent, while product mix was unfavorable by 1 percent. The volume increase was driven by demand related to the outbreak of COVID-19 and the work from home environment. Fourth quarter operating profit of $337 million increased 20 percent. Results benefited from organic sales growth and cost savings. The comparison was impacted by other manufacturing cost increases, increased advertising spending, higher input costs and increased general and administrative costs. Sales in North America increased 21 percent. Volumes rose 13 percent, with bathroom tissue and paper towels up double-digits and facial tissue up mid-single digits. Net selling prices improved 11 percent driven by lower promotion expense, while product mix was down 3 percent. Sales in D&E markets decreased 2 percent including a 6 point negative impact from changes in currency rates. Volumes rose 3 percent and the Softex Indonesia acquisition increased sales by 2 percent. Sales in developed markets outside North America increased 12 percent. Volumes increased 6 percent, driven by South Korea, and changes in currency rates increased sales 6 percent. 2018 GLOBAL RESTRUCTURING PROGRAM 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 about 1 percent of company net sales. The restructuring is expected to be completed in 2021. Total restructuring charges are anticipated to be $2,000 to $2,100 million pre-tax ($1,490 to $1,570 million after tax) compared to the previous estimate for charges 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 increased cost estimate includes impacts from delays as a result of COVID-19 and additional savings opportunities. The company expects the program will generate annual pre-tax cost savings of $540 to $560 million by the end of 2021 compared to the prior target of $500 to $550 million. Through the end of 2020, the company has incurred cumulative restructuring charges of $1,821 million pre-tax ($1,354 million after tax) and generated cumulative savings of $420 million. 2021 OUTLOOK The company's 2021 outlook assumes no significant impact from potential supply chain disruptions as a result of COVID-19. In addition, key planning and guidance assumptions are as follows:
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