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Kimberly-Clark Gains From Solid Savings & Restructuring Plans

Zacks Equity Research

Kimberly-Clark Corporation KMB is gaining investors’ attention on the back of robust growth initiatives. This renowned personal care products company’s shares have gained 9% in the past three months compared with the industry’s rise of 6.5%. Let’s take a closer look at the factors that are driving this Zacks Rank #2 (Buy) stock.

Global Restructuring & FORCE Programs Yield Results

The 2018 Global Restructuring Program is one of the biggest restructuring initiatives of the company. The plan is likely to enhance the company’s underlying profitability by simplifying supply chain and manufacturing structures. This enables it to compete better and provide greater flexibility to undertake growth-oriented investments. During the first quarter of 2019, Kimberly-Clark generated savings of roughly $60 million from the Global Restructuring Program, taking the cumulative savings to $195 million. Management earlier projected savings of $100-$125 million from this program in 2019. Moreover, the company continues to expect pre-tax savings of $500 million to $550 million from this program by the end of 2021. As part of this initiative, the company plans to sell or exit some low-margin businesses that deliver about 1% of net sales, mainly concentrated in the consumer tissue unit.

Moreover, Kimberly-Clark is aggressively cutting costs and enhancing supply-chain productivity through the Focus on Reducing Costs Everywhere or FORCE. The program has been generating solid cost savings for a while. During the first quarter, Kimberly-Clark generated savings of $55 million from this program. For 2019, the company expects savings of $400-$450 million.

Other Growth-Oriented Initiatives

Kimberly-Clark is committed toward the three key strategic growth pillars. These include focus on improving core business in developed markets, boost growth in the Personal Care segment in developing and emerging markets as well as enhance digital and e-commerce capacities. The company expects to meet these objectives through product development across different categories and leverage capabilities in marketing and sales.

Additionally, the company introduced the K-C Strategy 2022 in January 2019. The strategy is focused on generating balanced and sustainable growth to return value to shareholders in a tough environment. The program focuses on strengthening the company’s brands, undertaking efficient capital allocation and executing robust cost discipline.

Wrapping Up

The company is progressing well with the aforementioned objectives, which are aiding portfolio and business growth. That said, we expect Kimberly-Clark to sustain in investors good books in the forthcoming periods.

Looking For Consumer Staples Stocks? Check These

The Estee Lauder Companies EL, with long-term earnings growth rate of 13%, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McCormick & Company MKC, with long-term earnings growth rate of 9%, carries a Zacks Rank #2.

General Mills GIS, with a Zacks Rank #2, has long-term earnings growth rate of 7.5%.

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