01—Abstract
Summary
Summary of the 10-K filed February 29, 2012. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation's 2011 results show net sales rising to $20.85 billiona from $19.75 billion, with operating profit falling to $2.44 billion from $2.77 billion, reflecting $415 million of pretax charges for the pulp and tissue restructuring and $580 million of cost inflation in key inputs.
Net income attributable to Kimberly-Clark decreased to $1.59 billionb from $1.84 billion, and diluted earnings per share were $3.99 compared with $4.45 in 2010. Management reported that cost savings of about $265 million and net selling price increases of 2 percent partially offset these pressures, and that Kimberly-Clark International (KCI) accounted for about 36 percent of company sales. Cash provided by operations fell to $2.29 billion from $2.74 billion, driven mainly by higher defined benefit pension contributions of $679 million versus $245 million in 2010.
The company repurchased $1.24 billionc of common stock in 2011, paid $1.10 billion in dividends, and expects 2012 share repurchases of $900 million to $1.1 billion and capital spending of $1.0 to $1.1 billion. The dividend was raised 6 percent for 2012, the 39th consecutive annual increase.
Looking ahead, the company expects commodity cost inflation to moderate in 2012 but anticipates negative currency effects from a weaker foreign currency versus the U.S. dollar. Two restructuring actions are expected to be substantially completed by December 31, 2012, with cumulative charges of approximately $550 million to $600 milliond before tax across 2011 and 2012, and are projected to reduce 2013 annual net sales by $250 million to $300 million while increasing operating profit by at least $75 million in 2013 and $100 million in 2014.
02—Key points
Key Highlights
- Net sales increased 5.6 percent to $20.85 billion, driven by favorable currency effects, higher net selling prices and higher volumes.
- Operating profit decreased 11.9 percent to $2.44 billion, including $415 million of pretax pulp and tissue restructuring charges.
- Diluted EPS fell 10.3 percent to $3.99; net income attributable to Kimberly-Clark decreased 13.7 percent to $1.59 billion.
- Cash provided by operations declined 16.6 percent to $2.29 billion, primarily due to $679 million of pension contributions.
- Returned $2.3 billion to shareholders in 2011 through $1.24 billion of share repurchases and dividends; 2012 buybacks planned at $900 million to $1.1 billion.
- Pulp and tissue restructuring expected to reduce 2013 annual net sales by $250 to $300 million and increase operating profit by at least $75 million in 2013 and $100 million in 2014.
- Wal-Mart Stores, Inc. accounted for approximately 12 percent of 2011 net sales, down from 13 percent in 2010 and 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Kimberly-Clark kept $0.08.
- Revenue$20.85B100.0%
- Cost of revenue−$14.69B70.5%
- Gross profit$6.15B29.5%
- Operating costs−$3.71B17.8%
- Operating income$2.44B11.7%
- Interest, other & tax−$851.0M4.1%
- Net income$1.59B7.6%
Where FY2011 revenue went
$20.85B- Cost of revenue: $14.69B, 70% of revenue
- Other operating costs: $3.39B, 16% of revenue
- Net income: $1.59B, 7.6% of revenue
- R&D: $316.0M, 1.5% of revenue
- Interest, other & tax: $851.0M, 4.1% of revenue
Kept 7.6% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 29, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $20.85B$19.75B | +5.6% |
| Cost of Revenue | $14.69B$13.20B | +11.4% |
| Gross Profit | $6.15B$6.55B | −6.1% |
| R&D Expenses | $316.00M$317.00M | −0.3% |
| Operating Income | $2.44B$2.77B | −11.9% |
| Interest Expense | $277.00M$243.00M | +14.0% |
| Net Income | $1.59B$1.84B | −13.7% |
| EPS (Basic) | $4.02$4.47 | −10.1% |
| EPS (Diluted) | $3.99$4.45 | −10.3% |
| Shares Outstanding (Basic) | 395.70M412.40M | −4.0% |
| Shares Outstanding (Diluted) | 398.60M414.40M | −3.8% |
05—Questions
Frequently Asked Questions
What drove the decline in operating profit in 2011?
Operating profit fell $331 million to $2.44 billion. The company cited $415 million of pulp and tissue restructuring charges and $580 million of inflation in key cost inputs, which outweighed $265 million of cost savings, higher net sales and a 2 percent increase in net selling prices.
How did the four business segments perform?
Personal Care operating profit fell to $1.53 billion from $1.76 billion on net sales of $9.13 billion. Consumer Tissue operating profit rose to $775 million from $660 million on net sales of $6.77 billion. K-C Professional & Other operating profit rose to $487 million from $468 million on net sales of $3.29 billion. Health Care operating profit rose to $219 million from $174 million on net sales of $1.61 billion.
What are the company's restructuring plans and expected outcomes?
A pulp and tissue restructuring plan adopted January 21, 2011 involves streamlining, selling or closing six manufacturing facilities, and a further North American facility was announced January 24, 2012 with estimated charges of $30 million to $50 million before tax. Both actions are expected to be substantially completed by December 31, 2012, with cumulative charges of about $550 million to $600 million before tax across 2011 and 2012.
Is the company's dividend growing, and what is its capital return policy?
The quarterly dividend was raised 6 percent for 2012, the 39th consecutive annual increase, and dividends have been paid since 1935. Cash dividends declared were $2.80 per share in 2011 compared with $2.64 in 2010. The company repurchased $1.24 billion of stock in 2011 and plans $900 million to $1.1 billion of repurchases in 2012, subject to market conditions.
What are the key risks highlighted in the filing?
The filing highlights volatility in pulp and petroleum-based material prices, intense competition and private label pressure, slow economic growth in developed markets, dependence on key retail customers, and foreign market risks in over 175 countries. Derivative instruments have not been used to manage pulp price risk. The company also notes exposure to Venezuela, where its net investment was approximately $250 million at December 31, 2011.
06—Continue