01—Abstract
Summary
Summary of the 10-K filed February 22, 2013. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation's 2012 Annual Report (Form 10-K) reports net sales of $21.06 billiona, up from $20.85 billion in 2011, and net income attributable to Kimberly-Clark Corporation of $1.75 billion, compared with $1.59 billion in 2011.
Diluted earnings per share were $4.42b, versus $3.99 in 2011. Operating profit rose to $2.69 billion from $2.44 billion. Results include pre-tax charges of $299 million related to the European strategic changes, and $135 million for pulp and tissue restructuring actions, compared with $415 million for that restructuring in 2011.
The company approved strategic changes in October 2012 for its Western and Central European consumer and professional businesses. It will exit the diaper category in that region, except Italy, and divest or exit lower-margin businesses, mostly in consumer tissue. The actions involve selling or closing five European manufacturing facilities and reducing the European workforce by approximately 1,300 to 1,500 positions.
The restructuring is expected to be completed by December 31, 2014, with cumulative charges of approximately $300 to $400 millionc pre-tax. Cash flow improved, with cash provided by operations of $3.29 billion, up from $2.29 billion, and the company repurchased $1.3 billion of common stock.
Looking ahead, the company plans to repurchase $1.0 billion to $1.2 billiond of stock in 2013 and increased its regular quarterly dividend by 9 percent for 2013. It also expects an after-tax charge of $25 to $35 million in the first quarter of 2013 from the remeasurement of its Venezuelan balance sheet following the February 13, 2013 currency devaluation.
02—Key points
Key Highlights
- Net sales of $21.06 billion in 2012, up from $20.85 billion in 2011; Personal Care net sales rose to $9.58 billion from $9.13 billion.
- Net income attributable to Kimberly-Clark of $1.75 billion, or $4.42 diluted EPS, versus $1.59 billion and $3.99 in 2011.
- Cash provided by operations of $3.29 billion, up from $2.29 billion, aided by lower defined benefit pension contributions ($110 million in 2012 versus $679 million in 2011).
- European strategic changes involve exiting most diaper business in Western and Central Europe, with five manufacturing facility sales or closures and 1,300 to 1,500 positions cut; pre-tax charges of $299 million recognized in 2012.
- Share repurchases of $1.3 billion in 2012 and planned repurchases of $1.0 billion to $1.2 billion in 2013; quarterly dividend increased 9 percent for 2013.
- Venezuelan currency devaluation on February 13, 2013 is expected to result in an after-tax charge of $25 to $35 million in the first quarter of 2013.
- Wal-Mart Stores, Inc. accounted for approximately 12 percent of net sales in 2012 and 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Kimberly-Clark kept $0.09.
- Revenue$19.47B100.0%
- Cost of revenue−$13.34B68.5%
- Gross profit$6.13B31.5%
- Operating costs−$3.75B19.3%
- Operating income$2.38B12.2%
- Interest, other & tax−$627.0M3.2%
- Net income$1.75B9.0%
Where FY2012 revenue went
$19.47B- Cost of revenue: $13.34B, 69% of revenue
- Other operating costs: $3.42B, 18% of revenue
- Net income: $1.75B, 9.0% of revenue
- R&D: $335.0M, 1.7% of revenue
- Interest, other & tax: $627.0M, 3.2% of revenue
Kept 9.0% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 22, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $19.47B$20.85B | −6.6% |
| Cost of Revenue | $13.34B$14.69B | −9.2% |
| Gross Profit | $6.13B$6.15B | −0.4% |
| R&D Expenses | $335.00M$316.00M | +6.0% |
| Operating Income | $2.38B$2.44B | −2.7% |
| Interest Expense | $285.00M$277.00M | +2.9% |
| Net Income | $1.75B$1.59B | +10.0% |
| EPS (Basic) | $4.45$4.02 | +10.7% |
| EPS (Diluted) | $4.42$3.99 | +10.8% |
| Shares Outstanding (Basic) | 393.00M395.70M | −0.7% |
| Shares Outstanding (Diluted) | 396.10M398.60M | −0.6% |
05—Questions
Frequently Asked Questions
How did Kimberly-Clark perform financially in 2012?
Net sales rose to $21.06 billion from $20.85 billion, and operating profit increased to $2.69 billion from $2.44 billion. Net income attributable to Kimberly-Clark was $1.75 billion, with diluted EPS of $4.42 compared with $3.99 in 2011. The filing notes that 2012 results include pre-tax charges of $299 million for the European strategic changes and $135 million for pulp and tissue restructuring.
What are the European strategic changes and what do they cost?
Approved in October 2012, the changes focus resources on stronger market positions in Western and Central Europe. The company will exit the diaper category there, except Italy, and divest or exit lower-margin businesses, mostly in consumer tissue. The actions involve selling or closing five European manufacturing facilities. The restructuring is expected to be completed by December 31, 2014, with cumulative charges of approximately $300 to $400 million pre-tax. The businesses being exited or divested generate annual net sales of approximately $500 million with negligible operating profit.
How is the company returning cash to shareholders?
In 2012 the company repurchased $1.3 billion of common stock and raised its dividend by 6 percent, its 40th consecutive annual increase. Share repurchases and dividends totaled $2.5 billion in 2012. For 2013, the company plans to repurchase $1.0 billion to $1.2 billion of stock, subject to market conditions, and increased its regular quarterly dividend by 9 percent.
What is the company's exposure to Venezuela?
K-C Venezuela represented 2 percent of consolidated net sales in 2012 and 4 percent of consolidated operating profit. At December 31, 2012, the bolivar-denominated net monetary asset position was $211 million and the net investment was approximately $351 million. Following the February 13, 2013 devaluation to 6.3 bolivars per U.S. dollar, the company expects an after-tax charge of $25 to $35 million in the first quarter of 2013.
What are the main risks identified in the filing?
Risk factors include increases in prices for pulp, petroleum-based materials and energy; intense competition and private-label pressure; economic and credit market conditions; dependence on key retail customers; foreign market risks across operations in 40 countries; and litigation, tax and regulatory matters. The company has not used derivative instruments to manage pulp price risk, and it notes that pending litigation is not expected to have a material adverse effect.
06—Continue