Pandemic Stockpiles Deflate Kimberly-Clark Q2 Earnings

Kimberly-Clark’s second-quarter earnings missed Wall Street estimates, as consumers and retailers continue working through their pandemic-era stockpiles of paper products, according to a company announcement Friday (July 23).

The company’s net sales for the three-month period ending June 30 of $4.7 billion represents a 2 percent increase over the same period in 2020, but organic sales fell in the quarter by 3 percent. The lackluster performance has Kimberly-Clark looking at an organic sales dip of up to 2 percent overall in 2021.

Kimberly-Clark’s personal care segment was up 13 percent to $2.5 billion in Q2, while the consumer tissue segment dropped by 13 percent year-over year to $1.4 billion. The K-C Professional segment was up 6 percent to $800,000.

For the first six months of 2021, Kimberly Clark sales are down 2 percent to $9.5 billion.

“Our second quarter reflects continued pandemic-driven volatility,” said Kimberly-Clark Chairman and Chief Executive Officer Mike Hsu on today’s earnings call. “We are facing significantly higher input costs and a reversal in consumer tissue volumes from record growth in the year ago period as consumers and retailers in North America continued to reduce home and retail inventory.

“While we look forward to a return to a more normalized environment, we have moved decisively to take pricing actions to mitigate inflationary headwinds and continue to prudently manage costs. We remain confident in our strategy and in our fundamental brand performance. Our personal care business is performing well, and we continue to improve our market positions in key markets and realize robust growth across developing and emerging markets,” he said.

Kimberly-Clark will continue to focus on what Hsu called K-C Strategy 2022.

“While our updated outlook reflects a more challenging near-term environment, we are taking appropriate actions and remain confident in our strategies to create long-term shareholder value,” he said.

The shift in consumer purchases of paper products didn’t entirely sneak up on Kimberly-Clark, which converted a plant to make toilet paper for homes instead of offices earlier this year as a nod to the continuation of the work-from-home or hybrid work model that’s likely to endure long past the end of the COVID-19 pandemic.