Kimberly-Clark Q4 sales up 1%, will cut 5,000 jobs, close plants
Staff Writer |
Kimberly-Clark Corporation reported year-end 2017 results. Sales of $4.6 billion in the fourth quarter of 2017 were up 1 percent compared to the year-ago period.
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Changes in foreign currency exchange rates benefited sales by more than 1 percent. Organic sales fell about 1 percent, as lower net selling prices of 2 percent were partially offset by improved product mix of 1 percent and slightly higher volumes.
In North America, organic sales were down 3 percent in consumer products and up 1 percent in K-C Professional.
Outside North America, organic sales increased 4 percent in developing and emerging markets but fell 3 percent in developed markets.
Fourth quarter operating profit was $812 million in 2017 and $839 million in 2016. Fourth quarter adjusted operating profit was $836 million in 2017 and $859 million in 2016.
The year-over-year comparison was impacted by lower net selling prices and $130 million of higher input costs, driven by increases in pulp and other raw materials.
Results benefited from favorable volumes and product mix, $95 million of cost savings from the company's FORCE program and reduced marketing, research and general spending.
The fourth quarter effective tax rate was 19.2 percent in 2017 and 35.7 percent in 2016. The rate in 2017 included a net benefit as a result of U.S. tax reform and related activities.
The fourth quarter adjusted effective tax rate was 29.7 percent in 2017 and 35.4 percent in 2016.
Kimberly-Clark's share of net income of equity companies in the fourth quarter was $25 million in 2017 and $29 million in 2016.
At Kimberly-Clark de Mexico, results were impacted by higher input costs, partially offset by benefits from sales growth and cost savings.
The 2018 Global Restructuring Program is expected to reduce Kimberly-Clark's structural cost base and enhance the company's flexibility to invest in its brands, growth initiatives and capabilities critical to delivering future growth.
The program will make Kimberly-Clark's overhead organization structure and manufacturing supply chain less complex and more efficient.
Over time, the program is expected to accelerate the company's return to delivering sales and earnings growth in line with its Global Business Plan objectives and further enhance long-term shareholder value.
The company expects the program will generate annual pre-tax cost savings of $500 to $550 million by the end of 2021.
Savings will be driven by workforce reductions, which are anticipated to be in a range of 5,000 to 5,500 (12 to 13 percent of current headcount), along with manufacturing supply chain efficiencies.
The program is expected to broadly impact all of the company's business segments and organizations in each major geography. The savings are incremental to the company's ongoing FORCE cost savings program. ■