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Kimberly-Clark (NYSE:KMB) reported third-quarter results on Oct. 24. The maker of brands including Huggies diapers and Kleenex tissues continues to struggle with sluggish sales, leaving the consumer-goods giant's profit growth largely dependent on its cost-cutting initiatives.

Kimberly-Clark results: The raw numbers


Q3 2016

Q3 2015

Growth (YOY)


$4.594 billion

$4.718 billion


Net income

$550 million

$517 million


Earnings per share




Data source: Kimberly-Clark Q3 2016 Earnings Press Release.

What happened with Kimberly-Clark this quarter?

Net sales decreased 2.6% to $4.6 billion, as organic sales were essentially even with the year-ago quarter and foreign-exchange movements reduced sales by more than 2%.

Adjusted operating profit -- which excludes restructuring costs, pension settlement charges, and other nonrecurring items -- rose 1% to $836 million, as results were boosted by cost savings related to Kimberly-Clark's FORCE (Focused On Reducing Costs Everywhere) program and lower raw-material costs.

All told, adjusted net income fell slightly to $551 million from $552 million in Q3 2015. And adjusted earnings per share, aided by share buybacks, inched up to $1.52 from $1.51 in the prior-year period.

What management had to say

"We experienced a more challenging economic and competitive environment in the third quarter," said Chairman and CEO Thomas Falk in a press release. "Nonetheless, our market share positions are broadly healthy. We achieved strong cost savings, improved margins and increased cash flow in the quarter."

Cash flow and capital returns

Third-quarter operating cash flow rose 12% to $948 million, mainly due to Kimberly-Clark's improved working capital, and free cash flow surged 32% to $578 million. Management continues to pass this cash on to shareholders via dividends and stock buybacks, with the company repurchasing 1.7 million shares at a cost of $225 million in the third quarter. Kimberly-Clark stock currently has a dividend yield of roughly 3.1%.

Looking forward

Kimberly-Clark lowered its forecast for organic sales growth to 2%, down from prior expectations for growth at the low end of the 3% to 5% range. The company also reduced its adjusted EPS estimate to between $5.95 and $6.05, compared with its previous outlook of $5.95 to $6.15.

"While it has been a more difficult environment to generate top-line growth this year, we are competing effectively and our market positions are in good shape," added Falk during a conference call with analysts. "We are managing the company with financial discipline. And we continue to execute our global business plan strategies for long-term success and shareholder return."

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