Kimberly-Clark (K-C) has reported strong third quarter organic sales and an improving performance in its tissue business despite a “dynamic and challenging” macro environment.
Net sales for the quarter increased 7% to $5bn compared to the year-ago period, with organic sales increasing 4%.
Changes in foreign currency exchange rates increased sales 1% and the net impact of the Softex Indonesia acquisition and exited businesses in conjunction with the company’s 2018 Global Restructuring Programme increased sales 2%.
The company is targeting a full-year 2021 organic sales decline of 1 – 2%.
In North America, organic sales for the quarter increased 3% in consumer products and 16% in K-C Professional.
Outside North America, organic sales were up 6% in D&E markets and were even with year-ago in developed markets.
Third quarter operating profit was $657m in 2021 compared with $666m in 2020.
In the Consumer Tissue segment, third quarter sales of $1.5bn decreased 5%. While changes in currency rates increased sales 1%.
Volumes declined 7% while net selling prices increased sales 1%.
The company said that the volume comparison reflects elevated shipments in North America and developed markets in the year-ago period to support higher consumer and customer demand related to the global outbreak of Covid-19.
Third quarter operating profit for the segment decreased 30% to $222m.
The business said this was due to lower organic sales, higher input costs and other manufacturing cost increases including inefficiencies from lower production volumes.
Sales in North America decreased 8% while volumes also fell 8.
Sales in developed markets outside North America decreased 6% and volumes were down 6%.
Mike Hsu, K-C Chairman and Chief Executive, said: “Our third quarter results reflect a dynamic and challenging macro environment.
“Our organic sales were strong, including double-digit growth in a number of our personal care markets, and improving performance in tissue and our professional business.
“Market share performance also remained strong, demonstrating the strength of our innovation and excellent local commercial execution.
“Our earnings were negatively impacted by significant inflation and supply chain disruptions that increased our costs beyond what we anticipated.
“We are taking further action, including additional pricing and enhanced cost management, to mitigate these headwinds as it is becoming clear they are not likely to be resolved quickly.”
He added the business will continue to invest in its brands as it navigates through a “volatile and difficult macro environment”.
“Our strategy is working, and we remain confident in our future and our ability to create long-term shareholder value,” he added.
For the first nine months of 2021, sales of $14.5bn increased 1%.
Organic sales decreased 2% as volumes declined 5% while net selling prices increased 2%. and product mix improved 1%.
Year-to-date operating profit was $2,040m in 2021 compared with $2,495m a year earlier.
K-C’s 2018 Global Restructuring Programme is due to be completed by the end of 2021.
As part of the programme, the company expects to exit or divest some low-margin businesses that generate around 1% of company net sales.