Kimberly-Clark cuts marketing spend to offset rising costs

Kimberly-Clark, the FMCG giant behind brands including Andrex, Huggies and Kleenex, has seen gross profit fall -7 per cent to $1.5bn (£1.1bn) over the third quarter of the year, as significant inflation and ongoing supply chain disruption drive up business costs.

Operating profit was also down, sliding by 1 per cent down to $657m (£477m). This is despite the business recording a 7 per cent year-on-year increase in net sales, amounting to a little over $5bn (£3.6bn).

To help offset some of the rising costs, Kimberly-Clark reduced marketing, research and general spending over the quarter by 11 per cent to $819m (£595m). While promising to continue investing its brands, chairman and CEO Mike Hsu said the company will be “disciplined” in its spending over the near future.

The business is now targeting organic sales decline of 1-2 per cent for the end of 2021. The prior outlook was for organic sales decline of 0-2 per cent percent. Adjusted operating profit is expected to decline 20-22 per cent year-on-year, a notable drop from the previously anticipated decline of 11-14 per cent.

“Our third quarter results reflect a dynamic and challenging macro environment,” Hsu said. “Our organic sales were strong, including double-digit growth in a number of our personal care markets, and improving performance in tissue and our professional business.”

However, costs increased “beyond what we anticipated”, he added, and given the “significant and rapid” changes in the operating environment, the business has “reprioritised” investment spending.

“Our focus is to serve our consumers and we are investing in our supply chain to better meet the demand for our products. We have reduced spending in other areas such as advertising and general and administrative spending. We are being disciplined with the spending, ensuring we continue to invest in our brands and commercial capabilities around innovation, consumer insights, and digital for long-term growth,” he said.

“We will continue to invest in our brands and capabilities. Our strategy is working, and we remain confident in our future and our ability to create long-term shareholder value.”