Kimberly Clark Could See A Slight Improvement In Its Top Line: Q1’17 Earnings Preview

by Trefis Team
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One of the giants in the Baby & Feminine Care market, Kimberly-Clark (NYSE:KMB) will release its Q1’17 earnings on April 24th.

A Quick Recap

Kimberly Clark has seen an extraordinary growth in its bottom line over the past few years, which continued in FY’16. Its non-GAAP EPS has risen from 4.80 in 2011 to 6.03 in 2016. This has primarily been led by its successful FORCE (focused on cost savings everywhere) initiative. In 2016, the company was able to save $450 million under this initiative, beating its guidance of $350-400 million.

However, the company has struggled to maintain a similar growth in its top line, which is visible from nearly 4% compounded average decline in its net sales since 2014. The main reasons being tough competition from P&G in North America and local diaper brands in emerging countries, in addition to high currency headwinds.

See our complete analysis for Kimberly-Clark here

Q1’17 Results: Slight Sales Improvement Possible; Bottom Line to Remain Strong

  • We don’t expect a huge surprise in Kimberly Clark’s top line growth as the competition is likely to stay, and the benefits from ongoing investment in product innovation will take time to reap.
  • However, there can be some positive contribution depending upon the success of its new premium launches in the Huggies lineup, which were introduced in November.
  • Also, the company is not expecting any offsets this year from lower sales of nonwovens to its former healthcare division, Halyard Heath.
  • On the other hand, earnings might continue to show the strength backed up by ongoing cost cutting initiatives and some ease in price wars in China, though anticipated commodity cost inflation can offset these benefits to some extent.

kmb-Q1'17-pre

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