DALLAS - Kimberly-Clark Corporation (NYSE: NYSE:KMB), known for its household brands like Huggies and Kleenex, announced a new phase in its business strategy aimed at accelerating growth and increasing operational efficiency. The company's Chairman and CEO, Mike Hsu, revealed plans for a new operating model and commercial initiatives during an investor day presentation today.
The company's transformation includes a sharpened strategic focus through a restructured operating model that aims to drive performance. Kimberly-Clark will concentrate on 12 leading brands that represent over 80% of its net sales. These brands dominate in five global daily-need categories which have a total addressable market of around $240 billion.
In a bid to optimize its margin structure, Kimberly-Clark is set to modernize its supply chain, leveraging technology and data analytics. This modernization is expected to yield over $3 billion in productivity savings and $500 million in working capital savings. These savings are intended to fuel further growth investments.
Kimberly-Clark also plans to reorganize its operations into three business segments: North America, International Personal Care (IPC), and International Family Care and Professional (IFP). This reorganization aims to improve agility, speed, and execution, and is expected to be completed by the end of 2024. The company anticipates $200 million in administrative savings from these changes to be reinvested in the business.
A significant announcement included the company's commitment to sustainability, with a new ambition to make its product portfolio 100% Natural Forest Free. Kimberly-Clark expects to be more than halfway to achieving this goal by 2030.
Financially, Kimberly-Clark has outlined long-term targets that include organic net sales growth surpassing market growth, mid-to-high single-digit growth in adjusted operating profit and earnings per share on a constant currency basis, and annual free cash flow generation of at least $2 billion.
The company's capital allocation priorities remain unchanged, focusing on organic growth investments, dividend growth, maintaining a strong credit rating, strategic acquisitions, and share repurchases to offset dilution from equity incentive programs.
For 2024, Kimberly-Clark reaffirmed its previous outlook, projecting a low-to-mid single-digit increase in organic net sales and a high single-digit to low double-digit rate growth in adjusted operating profit on a constant-currency basis.
These plans come with an estimated cost of $1.5 billion in restructuring and reorganization expenses over the next three years, split evenly between non-cash charges and cash expenses.
This news article is based on a press release statement from Kimberly-Clark Corporation.
InvestingPro Insights
As Kimberly-Clark Corporation (NYSE: KMB) embarks on a transformative journey to accelerate growth and enhance operational efficiency, it's important for investors to consider the company's financial health and market position. Here are some insights based on real-time data from InvestingPro, reflecting the company's current financial metrics and investment considerations:
InvestingPro Data shows that Kimberly-Clark has a market capitalization of $42.48 billion, indicating its significant presence in the industry. The company's P/E ratio stands at 24.16, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at 18.86. While the Price / Book ratio is high at 46.43, this may reflect investor confidence in the company's assets and brand value.
An InvestingPro Tip to consider is that Kimberly-Clark has raised its dividend for 51 consecutive years, demonstrating a strong commitment to returning value to shareholders. This is further supported by the company maintaining dividend payments for 54 consecutive years, suggesting a reliable income stream for investors. Additionally, the company operates with a moderate level of debt, which could provide some financial flexibility in executing its new business strategy.
Investors looking for more in-depth analysis and additional InvestingPro Tips can find them on the InvestingPro platform. For instance, there are more tips available that delve into the company's profitability forecasts and its liquidity position. To explore these insights and make informed investment decisions, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
As Kimberly-Clark restructures its operations and focuses on sustainability, these financial metrics and investment tips can help investors gauge the potential risks and rewards associated with the company's stock. With the next earnings date on April 23, 2024, stakeholders will be keen to see how these strategies are translating into financial performance.
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