Kimberly Clark: Declining Book Value is Unappealing


Diaper maker trying to keep hopes up

Kimberly Clark, $35 billion personal care manufacturer, has breached the $100/share mark after having peaked at $130 a year ago.

The Huggies diaper maker reported 0.31% revenue increase in its 2017 operations with 5.2% rise in profits.

“In 2017, we delivered bottom-line growth in a challenging environment. We also achieved all-time record FORCE cost savings of $450 million and reduced discretionary spending to help offset inflationary cost headwinds. In addition, we returned $2.3 billion to shareholders through dividends and share repurchases.”

“Although we expect market conditions will remain challenging in the near-term, we plan to deliver better results in 2018 while we begin to implement our new restructuring. We expect organic sales to return to growth while improving our margins and delivering double-digit growth in adjusted earnings per share. In addition, we will increase investments in our brands, our growth initiatives and the capabilities we need for long-term success. We will also continue to allocate capital in shareholder-friendly ways.”

“We believe that, over time, our 2018 Global Restructuring Program will accelerate our return to delivering on our long-term growth objectives. This is the biggest restructuring we have undertaken since the introduction of our Global Business Plan in 2003, and it will make our company leaner, stronger and faster. The changes we are making will improve our underlying profitability, provide more flexibility to invest in growth opportunities and help us compete even more effectively. At the same time, we are expecting our ongoing FORCE program to continue to deliver significant results and are making that clear by establishing a multi-year commitment for this program. Combined, our restructuring and FORCE programs will generate more than $2 billion of total cost savings over the next four years, giving us substantial funds to drive profitable growth. Today’s announcement is the latest example of Kimberly-Clark’s proactive and strategic approach to improving our business so we can win in the marketplace and create long-term shareholder value.”

Chairman and Chief Executive Officer Thomas J. Falk

It is very important that Kimberly-Clark keeps its investors, or what’s left of them, very much upbeat moving forward. Some of which may be already be turned off by its $7.4 billion debt over its $629 million equity.

In the past three years, the company allocated $5.9 billion in financing activities and accumulated $5.9 billion in free cash flow.

Part of its financing activities included Kimberly-Clark having provided $6.5 billion to its shareholders via dividends and buybacks.

Average analysts recommendation is hold with a target price of $117.06/share vs. $99.9 at the time of writing.

This blog usually does a valuation of a company base on its book value and in Kimberly-Clark’s case would not try making a value out of the recent figures.

Disclosure: No shares in Kimberly-Clark.

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