01—Abstract
Summary
Summary of the 10-K filed February 8, 2017. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation's 2016 Form 10-K reports net sales of $18.2 billiona, down 2 percent from 2015, with foreign currency changes reducing sales by 4 percent and organic sales increasing 2 percent.
Operating profit rose to $3,317 millionb from $1,613 million, a comparison distorted by $1,358 million of pension settlement charges and Venezuela-related charges in 2015. Adjusted operating profit increased 4 percent to $3,341 million, and diluted earnings per share from continuing operations were $5.99, versus $2.77 in 2015. Adjusted diluted EPS rose 5 percent to $6.03 (from $5.76).
Cash provided by operations was $3.2 billionc, up 40 percent from $2.3 billion in 2015, driven by improved working capital and lower pension contributions. The company returned cash to shareholders, repurchasing $750 million of stock and paying $1.3 billion in dividends, and raised its dividend 4.5 percent in 2016, the 44th consecutive annual increase. Total debt was $7.6 billion at year-end, down from $7.8 billion, and a $2.0 billion revolving credit facility remained unused.
For 2017, the company guided to EPS of $6.20 to $6.35d, organic sales growth of approximately 2 percent, operating profit up 2 to 4 percent versus adjusted 2016 results, at least $400 million of FORCE cost savings, and share repurchases of $800 million to $1 billion. Management also flagged currency headwinds, with unfavorable foreign currency translation expected to reduce operating profit growth by 2 percent.
02—Key points
Key Highlights
- Net sales of $18,202 million in 2016, down 2.1 percent from $18,591 million in 2015; organic sales grew about 2 percent on higher volumes.
- GAAP operating profit rose to $3,317 million from $1,613 million, while adjusted operating profit increased 4 percent to $3,341 million.
- Diluted EPS from continuing operations was $5.99 (2015: $2.77); adjusted diluted EPS was $6.03, up from $5.76.
- Cash provided by operations was $3,232 million, compared with $2,306 million in 2015.
- Returned capital to shareholders: $750 million in share repurchases (6.0 million shares) and $1.3 billion in dividends paid; dividend increased 4.5 percent, the 44th consecutive annual increase.
- Record FORCE cost savings of $435 million in 2016; the company plans at least $400 million of savings in 2017.
- 2017 outlook: EPS of $6.20 to $6.35, organic sales growth of about 2 percent, and capital spending of $850 million to $950 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Kimberly-Clark kept $0.12.
- Revenue$18.29B100.0%
- Cost of revenue−$11.60B63.4%
- Gross profit$6.69B36.6%
- Operating costs−$3.31B18.1%
- Operating income$3.38B18.5%
- Interest, other & tax−$1.22B6.7%
- Net income$2.17B11.8%
Where FY2016 revenue went
$18.29B- Cost of revenue: $11.60B, 63% of revenue
- Other operating costs: $2.98B, 16% of revenue
- Net income: $2.17B, 12% of revenue
- R&D: $326.0M, 1.8% of revenue
- Interest, other & tax: $1.22B, 6.7% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 8, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $18.29B$18.59B | −1.6% |
| Cost of Revenue | $11.60B$11.97B | −3.1% |
| Gross Profit | $6.69B$6.62B | +1.0% |
| R&D Expenses | $326.00M$324.00M | +0.6% |
| Operating Income | $3.38B$1.61B | +109.7% |
| Interest Expense | $319.00M$295.00M | +8.1% |
| Net Income | $2.17B$1.01B | +113.8% |
| EPS (Basic) | $6.03$2.78 | +116.9% |
| EPS (Diluted) | $5.99$2.77 | +116.2% |
| Shares Outstanding (Basic) | 359.40M363.80M | −1.2% |
| Shares Outstanding (Diluted) | 361.70M366.30M | −1.3% |
05—Questions
Frequently Asked Questions
Why did reported operating profit more than double in 2016?
2015 operating profit of $1,613 million included $1,358 million of pension settlement charges and about $153 million of Venezuela-related charges. In 2016, operating profit was $3,317 million, and adjusted operating profit, which excludes these items, rose 4 percent to $3,341 million from $3,210 million.
How did currency affect results in 2016?
Weakening foreign currency exchange rates reduced net sales by about 4 percent and lowered operating profit by $90 million through translation effects. Transaction effects also had a negative impact on results.
What is the company's 2017 earnings guidance?
Kimberly-Clark expects 2017 earnings per share between $6.20 and $6.35. The outlook assumes organic sales growth of about 2 percent, operating profit up 2 to 4 percent versus adjusted 2016 operating profit, and an effective tax rate similar to 2016.
How strong is the company's balance sheet and liquidity?
Total debt was $7.6 billion at December 31, 2016, down from $7.8 billion a year earlier. Cash and cash equivalents were $923 million, and a $2.0 billion revolving credit facility expiring in 2021 was unused. Management believes cash from operations and debt issuance capacity are adequate for the foreseeable future.
How concentrated is the company's customer base?
Net sales to Wal-Mart Stores, Inc. were approximately 14 percent of total net sales in 2016 and 2015. The risk factors also note that increasing dependence on key retailers could give large customers bargaining power to demand higher trade discounts.
06—Continue