Household products company Kimberly-Clark (NYSE:KMB) reported Q4 CY2024 results topping the market’s revenue expectations, but sales were flat year on year at $4.93 billion. Its non-GAAP profit of $1.50 per share was 0.9% below analysts’ consensus estimates.
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Kimberly-Clark (KMB) Q4 CY2024 Highlights:
- Revenue: $4.93 billion vs analyst estimates of $4.86 billion (flat year on year, 1.4% beat)
- Adjusted EPS: $1.50 vs analyst expectations of $1.51 (0.9% miss)
- Adjusted EBITDA: $896 million vs analyst estimates of $887.1 million (18.2% margin, 1% beat)
- Operating Margin: 11.1%, down from 13.5% in the same quarter last year
- Free Cash Flow Margin: 12.3%, down from 20.1% in the same quarter last year
- Organic Revenue rose 2.3% year on year, in line with the same quarter last year
- Sales Volumes rose 1.5% year on year (0% in the same quarter last year)
- Market Capitalization: $43.82 billion
"2024 was a breakthrough year for Kimberly-Clark with the launch of our transformative, multi-year Powering Care strategy and successfully rewiring our organization into three powerhouse segments with world-class functional support," said Kimberly-Clark Chairman and CEO, Mike Hsu.
Company Overview
Originally founded as a Wisconsin paper mill in 1872, Kimberly-Clark (NYSE:KMB) is now a household products powerhouse known for personal care and tissue products.
Household Products
Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
Kimberly-Clark is one of the most widely recognized consumer staples companies. Its influence over consumers gives it negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don’t have). However, its scale is a double-edged sword because there are only a finite number of major retail partners, placing a ceiling on its growth. To accelerate sales, Kimberly-Clark must lean into newer products.
As you can see below, Kimberly-Clark’s sales grew at a weak 1% compounded annual growth rate over the last three years as it failed to grow its volumes. We’ll explore what this means in the "Volume Growth" section.
This quarter, Kimberly-Clark’s $4.93 billion of revenue was flat year on year but beat Wall Street’s estimates by 1.4%.
Looking ahead, sell-side analysts expect revenue to decline by 2.3% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products will see some demand headwinds. At least the company is tracking well in other measures of financial health.
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Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether Kimberly-Clark generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, Kimberly-Clark’s quarterly sales volumes have, on average, stayed about the same. This stability is normal as the quantity demanded for consumer staples products typically doesn’t see much volatility. The company’s flat volumes also indicate its average organic revenue growth of 3.9% was generated from price increases.
In Kimberly-Clark’s Q4 2024, sales volumes jumped 1.5% year on year. This result was a well-appreciated turnaround from its historical levels, showing the company is heading in the right direction.
Key Takeaways from Kimberly-Clark’s Q4 Results
It was good to see Kimberly-Clark narrowly top analysts’ revenue expectations this quarter on positive volume growth. On the other hand, its gross margin and EPS missed. This was a mixed quarter, and the stock remained flat at $131.70 immediately following the results.
So should you invest in Kimberly-Clark right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.