Kimberly-Clark de México revenue up, margins recover in Q2 ’23

Story originally published on Fastmarkets.com

Source: Kimberly-Clark divulgação

Kimberly-Clark de México (KCM) experiences strong performance and record profits despite export challenges during the second quarter of 2023, the company said in an earnings call on Friday July 21. “Both consumer and away-from-home products grew double-digits, and in the case of the former, through a healthy balance of volume and price, contributed to a robust first half of the year,” according to KCM chief executive officer Pablo González. “On the profitability side, we also posted records and strong growth, reaching our target margins,” he said. KCM’s net revenue reached 13.7 billion pesos ($807.1 million), a 6% increase compared with the second quarter of 2022. Revenue was boosted by the consumer products and away-from-home segments, which experienced significant growth of 11.8% and 26.1%, respectively, according to the company. Operating profit increased by 40.4% to 3.029 billion pesos ($178.2 million) in the second quarter. Earnings before interest, taxes, depreciation and amortization (Ebitda) totaled 3.5 billion pesos, a 31.2% increase, with a margin of 25.6%, which is an improvement of 480 basis points versus the second quarter of last year.

González said that if domestic consumption remains strong, competitive dynamics remain reasonable and prices are steady, the Ebitda margin may return to a 26% margin by the end of 2023. “Given the decrease in raw material prices and the strong peso, we could see our margin either at the higher end or above our target range in the short term,” he said. Net income for the second quarter was 1.8 billion pesos, a 52.9% increase from the same period in the previous year. The company’s exports, however, declined 41.6% during the quarter. KCM expects exports to remain in the negative in the third quarter, with a slight recover in the fourth quarter. For tissue prices, the company said it has started raising prices late in first quarter and early second quarter due to significant cost increases in the second half of last year. “We are watching [tissue prices] very, very carefully, but stronger pricing is still in the market on the tissue side,” González said. “We will continue to analyze opportunities for price realization in tissue, and that could be price increases, but also… being more efficient in terms of how we utilize our resources to push our bathroom tissue, diapers, and FamCare brands at the shelf. So, that will continue to be a focus of us, certainly,” he said. According to KCM, better prices both for pulp and recycled fiber are expected during the third quarter of 2023, despite the company not seeing the full positive impact of passing along costs this quarter. Regarding future outlooks, KCM expects a more favorable cost scenario going forward. The CEO noted that pulp and recycled fiber prices are finally coming down, while “fluff [is] still significantly higher than last year, but may start to come down a little bit, not as much, but a little bit. Superabsorbent materials and resins will continue to be favorable,” González said. The company also remains optimistic about the resilience of the Mexican domestic economy and the potential for market growth and penetration in less-developed segments. “We believe our strong innovation pipeline together with more effective investments behind the brands will strengthen our market positions. KMC is pleased with our progress and excited with the opportunities we see going forward,” González said.

By ana.enis@fastmarkets.com