Stock under pressure: Kimberly Clark Corp (NYSE: KMB)

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Kimberly Clark Corp (NYSE: KMB) stock fell over 0.4% on 23rd April, 2020 (as of 11:24 am GMT-4 ; Source: Google finance) after the company reported first quarter of FY 20. The sales of tissue and toilet paper grew 13% in the first quarter as consumers stocked up in preparation for the coronavirus pandemic. However, the company has suspended its forecast for the year. Cash provided by operations was strong at $704 million compared to a soft quarter last year of $317 million. The year-on-year increase was on back of higher earnings and improved working capital. Capital spending was $352 million in the quarter,

KMB in the first quarter of FY 20 has reported the adjusted earnings per share of $2.13, beating the analysts’ estimates for the adjusted earnings per share of $1.98. The company had reported the adjusted revenue growth of 8 percent to $5.01 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $4.89 billion, according to IBES data from Refinitiv. Organic sales rose 11%, while currencies were a 2-point drag. Volumes had also increased by 8%, including significant shipments to support consumer stock-up related to the COVID-19 outbreak. First quarter adjusted gross margin was 37.2%, up 370 basis points year-on-year. Adjusted gross profit increased 20%.

Meanwhile, in January 2018, KMB had 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, the company intends to exit or divest some low-margin businesses that generate approximately 1 percent of company net sales.

On the back of   the outbreak of COVID-19 and the related uncertainty and complexity of the environment, the company now anticipates that some restructuring activity and the related charges will extend into 2021 rather than getting completed at the end of 2020 as previously planned. Total restructuring charges to implement the program are anticipated to be toward the high end of the previously estimated range of $1,700 to $1,900 million pre-tax ($1,300 to $1,400 million after tax). The company continues to project the program will generate annual pre-tax cost savings of $500 to $550 million. The company continues to target to achieve those savings by the end of 2021, although it is possible the full realization could occur in 2022 because of the uncertainties related to COVID-19.

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