Investors had low expectations heading into the start of Kimberly-Clark's (KMB 1.28%) fiscal 2019, given that sales growth slowed over the past few quarters, and earnings declined as the company struggled to pass along higher costs in the context of weak demand.

Management in January warned that planned price increases would add volatility to the consumer products giant's sales volumes, and that prediction was confirmed in the most recent quarter. However, Kimberly-Clark's latest performance kept it on track to meet executives' broader 2019 operating goals.

Here's a look at how the headline results stacked up against the prior-year period :


Q1 2019

Q1 2018

Year-Over-Year Change


$4.6 billion

$4.7 billion


Net income

$466 million

$97 million


Earnings per share




Data source: Kimberly Clark's financial filings. 

First-quarter highlights

Kimberly-Clark's organic sales growth held steady as price increases more than offset falling volumes. The price boosts fully offset rising input costs, though, and so core profitability was unchanged. The results allowed the company to maintain its key operating forecasts for the year.

A box of tissues.

Image source: Getty Images.

Highlights of the quarter include:

  • Reported sales fell 2%, but after accounting for the impact of currency exchange rate shifts, organic sales rose 3%. That result matched the prior quarter's boost and came entirely from a 4% pricing increase. Sales volumes dipped by 2%, as management had predicted they might.
  • Kimberly-Clark's international segment grew much faster than its U.S. business, which delivers most of its profits.
  • Price hikes, combined with cost cuts, offset rising input costs on materials like pulp and oil. The company also spent more aggressively on advertising. Despite these rising outlays, adjusted operating profit landed at $807 million, or the same 17.4% margin as a year earlier.
  • Reported earnings jumped by almost 400%, but that figure was heavily influenced by prior-year charges related to Kimberly-Clark's restructuring program.

Management's comments

Executives expressed optimism about their ability to navigate a tough environment for costs and global consumer demand. "I'm encouraged with our first quarter results," CEO Mike Hsu said in a press release. "We made excellent progress driving higher selling prices to help offset commodity costs and currency headwinds," he explained.

Management highlighted a few financial wins in the period, too. "We generated $115 million of cost savings," Hsu said, "and returned $510 million to shareholders through dividends and share repurchases."

Looking forward

Executives didn't make changes to the broader 2019 forecast that they've said will be pressured by challenging selling conditions. Sales are still expected to rise by about 2%, and while that would mark an improvement over the prior year's 1% uptick, it would likely trail rivals like Procter & Gamble. The organic gains aren't especially robust, either, given the falling sales volumes Kimberly-Clark is reporting.

Kimberly-Clark is predicting core profit growth of about 4% this year, which would translate into adjusted earnings of between $6.50 and $6.70 per share. Management is hoping profitability will improve in 2020 and beyond, but their medium-term forecast sees industry conditions remaining weak at least through 2022.