Kimberly-Clark Corporation's Q4 2023 sales of $5.0 billion were in line with prior year, with organic sales up 3%, driven by a 2% increase in price from ongoing revenue growth management programs and a 1% favorable product mix, with volumes in line with the prior year period and volume trends improving for the fourth consecutive quarter. Changes in foreign currency exchange rates reduced sales by approximately 2% and the divestiture of the tissue and K-C Professional business in Brazil reduced sales by approximately 1%.
Gross margin improved by 210 basis points to 34.9%, with higher net revenue realization, cost savings and favorable input costs partially offset by unfavorable currency impacts and higher other manufacturing costs. Gross profit grew 7% including $50 million in FORCE (Focus on Reducing Costs Everywhere) savings and $50 million in lower input costs.
Q4 2023 operating profit was $670 million compared to $712 million last year, resulting in an operating margin of 13.5%. Operating profit decreased by 6%, driven by currency impacts of $170 million that reflected a combination of currency translation, transactional currency costs, and net monetary position losses in hyperinflationary markets. Excluding this factor, an underlying increase in gross profit dollars was partially offset by planned increases in marketing, research and general expenses, coupled with higher incentive compensation levels.
"We had a solid finish to 2023, delivering strong organic growth as well as cost and earnings recovery above our initial expectations," said Kimberly-Clark Chairman and CEO Mike Hsu. "Our Q4 results demonstrate topline momentum with more balanced growth across volume, mix and price led by strong Personal Care results. I'm proud of our team's outstanding execution, including enhancing the value proposition of our global brands through consumer-centric innovation and stronger, more integrated commercial capabilities."
Full-Year 2023 Results
In 2023, sales of $20.4 billion increased 1%, with organic sales up 5%, driven by approximately 6% increase in price from ongoing revenue growth management programs and 1% from favorable product mix, offset by a 2% decrease in volume, with sequential improvements throughout the year. Changes in foreign currency exchange rates reduced sales by 3%, and the exit of its tissue and K-C Professional business in Brazil reduced sales by 1%.
Gross margin improved by 360 basis points to 34.4% and adjusted gross margin improved by 370 basis points to 34.5% reflecting higher net revenue realization as well as cost savings from its FORCE program of $325 million more than offsetting higher input costs of $65 million and higher other manufacturing costs of $195 million.
Full-year operating profit was $2.34 billion in 2023 versus $2.68 billion in 2022. Results included non-cash impairment charges on intangible assets that were partially offset by a net benefit from the Brazil divestiture in the Q2 2023.
Full-year adjusted operating profit was $2.96 billion in 2023 versus $2.62 billion in 2022. The increases from organic sales and benefits from productivity-led cost savings were partially offset by higher other manufacturing costs, input costs, and marketing, research and general expenses, and unfavorable impact from foreign currency.
2024 Outlook
The company currently expects to deliver a low-to-mid single digit percentage increase in 2024 Organic Net Sales versus the prior year period, with growth in reported Net Sales forecast to reflect negative impacts of approximately 300 basis points from currency translation and 60 basis points from the Brazil Tissue divestiture. Adjusted Operating Profit is expected to grow at a high single-digit to low double-digit rate on a constant-currency basis and Adjusted Earnings Per share are expected to grow at a high single-digit rate on a constant-currency basis versus the prior year period. Reported growth in Operating Profit and Earnings Per Share are currently expected to be negatively impacted by approximately 400 basis points from currency translation.
This outlook reflects assumptions subject to change given the macro environment.
Kimberly-Clark Corporation is an American multinational personal care corporation that produces mostly paper-based consumer products.
