Income · Stocks to Consider and Updates

Kimberly-Clark Beats Earning’s Estimate; Hikes Dividend

Kleenex and Huggies supplier Kimberly-Clark Corp. (NYSE: KMB – $117.23) reported fourth quarter sales of $4.6 billion in the fourth quarter of 2017, up 1% compared to the year-ago period, helped by favorable foreign exchange rates. Organic sales, however, fell about 1%, as lower net selling prices of 2% were partially offset by improved product mix and slightly higher volumes. In North America, organic sales were down 3% in consumer products and up 1% in K-C Professional. Outside North America, organic sales increased 4% in developing and emerging markets but fell 3% in developed markets.

       Fourth quarter adjusted operating profit was $836 million for the period equal to $1.57 per share vs. $1.45 in 2016 and two cents better than Street estimates. 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, which offset higher pulp and other input costs. As part of ongoing restructuring, the company said it will cut jobs by about 12 to 13 percent across all business segments and geography, due to lackluster sales predictions of 1 to 2 percent this year. The Dallas-based company will also divest some low-margin businesses this year.

       Management guided full-year 2018 earnings per share of $6.90 to $7.20 as compared to 2017’s full-year $6.23. The shares, in my opinion, offer decent risk-adjusted total return possibilities. KMB provides an attractive yield of 3.3% with a planned 3.1 % dividend increase to $1.00 per share that is well covered by free cash flow. Moreover, its defensive properties and sterling finances should appeal to conservative income accounts.

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