Kimberly-Clark Corp. (NYSE:KMB)

The analysis of the financial performance over the five-year period reveals several notable trends in the Personal Care segment.

Operating Profit

The operating profit showed a generally positive trajectory, beginning at 1857 million US dollars in 2016 and reaching a peak of 1933 million US dollars in 2020. There was a slight dip observed in 2018, where operating profit decreased to 1833 million US dollars from 1907 million in 2017, but the figure recovered in the following years.

Net Sales

Net sales appeared relatively stable with a marginal upward trend. Starting at 9046 million US dollars in 2016, net sales experienced minor fluctuations but gradually increased to 9339 million US dollars by 2020. The variation over the years was minimal, indicating consistent demand or pricing strategies in this segment.

Segment Profit Margin

The segment profit margin demonstrated some variation, with minor decreases and increases over time. It began at 20.53% in 2016, peaked at 21.01% in 2017, and then decreased slightly to 20.28% in 2018. In the final two years, margins were relatively stable, standing at 20.9% in 2019 and slightly decreasing to 20.7% in 2020. This pattern suggests that while the company maintained relatively steady profitability levels, margins were subject to some fluctuations possibly due to cost changes or pricing pressures.

Overall, the data indicates stable and slightly improving profitability and sales in the Personal Care segment, with operating profit and net sales showing resilience and a modest growth trend. The profit margin, while fluctuating, remained around the 20-21% range, reflecting consistent operational efficiency in the segment.

Operating Profit

The operating profit exhibited a fluctuating trend over the five-year period. Starting at $1,117 million in 2016, it declined to $1,034 million in 2017 and further decreased to $875 million in 2018. However, a recovery was observed in 2019 with an increase to $1,007 million, followed by a significant rise to $1,448 million in 2020, marking the highest value within the timeframe.

Net Sales

Net sales remained relatively stable from 2016 to 2019, with minor variations around the $6 billion mark. Specifically, net sales started at $5,967 million in 2016, slightly decreased to $5,932 million in 2017, increased to $6,015 million in 2018, and marginally dropped to $5,993 million in 2019. In 2020, net sales saw a notable increase to $6,718 million, indicating an upward shift in revenue generation.

Segment Profit Margin

The segment profit margin showed a decreasing trend initially, moving from 18.72% in 2016 down to 14.55% in 2018. This was followed by a recovery phase with margins increasing to 16.8% in 2019 and further improving significantly to 21.55% in 2020. The margin in 2020 represents the highest profitability ratio within the analyzed periods, suggesting improvement in operational efficiency or pricing power.

Operating Profit

The operating profit showed a modest increase from 603 million USD in 2016 to a peak of 657 million USD in 2019. However, there was a noticeable decline in 2020, dropping to 528 million USD. This represents a significant reduction in profitability during the last recorded period.

Net Sales

Net sales exhibited a general upward trend initially, rising from 3,150 million USD in 2016 to a high of 3,382 million USD in 2018. After that, sales declined slightly to 3,292 million USD in 2019 and more sharply to 3,019 million USD in 2020, indicating a contraction in sales volume or pricing.

Segment Profit Margin

The segment profit margin fluctuated over the periods. It increased from 19.14% in 2016 to 19.96% in 2019, showing improved efficiency or profitability relative to sales. However, in 2020, the margin dropped significantly to 17.49%, reflecting reduced profitability on the same sales base.

Overall Analysis

Over the five-year span, the segment experienced growth in both sales and operating profit until 2019, followed by declines in 2020. The decrease in both operating profit and segment margin in 2020 suggests increased cost pressures, lower sales, or a combination of both, which negatively impacted profitability. The data implies challenges in maintaining sales volumes and controlling costs to sustain profitability during the final year.

Operating Profit

The operating profit displayed a generally stable pattern with minor fluctuations. It rose slightly from 1857 million USD in 2016 to a peak of 1907 million USD in 2017, followed by a decline to 1833 million USD in 2018. Subsequently, it recovered somewhat, reaching 1904 million USD in 2019 and then increasing further to 1933 million USD in 2020. Overall, the operating profit maintained a relatively consistent range over the five-year period with a modest upward trend by 2020.

Assets

Assets demonstrated an overall increasing trend, beginning at 6141 million USD in 2016 and reaching 8486 million USD in 2020. There were some fluctuations through the years, with assets rising to 6592 million USD in 2017, declining slightly to 6208 million USD in 2018, increasing again to 6630 million USD in 2019, and then showing a significant jump in 2020. The substantial increase in 2020 suggests a notable expansion or investment occurred in that year.

Segment Return on Assets (ROA)

The segment ROA decreased gradually over the period, starting from 30.24% in 2016 and declining to 22.78% in 2020. There was a consistent downward trajectory with minor variations, dropping to 28.93% in 2017, slightly bouncing back to 29.53% in 2018, before continuing its decline to 28.72% in 2019 and then falling more sharply by 2020. This indicates that despite increasing assets, the segment's efficiency in generating operating profit from its asset base diminished over time.

Summary

While operating profit remained relatively stable with a slight upward trend, and assets increased significantly, the segment ROA exhibited a declining trend, signaling reduced asset utilization efficiency. The marked asset growth in 2020 did not correspond with a proportional increase in operating profit, contributing to the drop in ROA. This suggests that asset growth outpaced profit generation, which may warrant further examination of asset deployment or segment operational efficiency.

Operating Profit

The operating profit exhibited a fluctuating trend over the period. It started at $1,117 million in 2016, then decreased to $1,034 million in 2017 followed by a further decline to $875 million in 2018. However, there was a recovery starting in 2019 with operating profit rising to $1,007 million and a significant increase reaching $1,448 million in 2020. This indicates a period of initial contraction followed by a strong growth phase in the latter years.

Assets

Assets showed modest variation during the timeframe. The value was $4,761 million in 2016, increased slightly to $5,007 million in 2017, then decreased to $4,738 million in 2018. This was followed by a gradual increase to $4,954 million in 2019 and a further increase to $5,227 million in 2020. Overall, the asset base remained relatively stable with slight growth toward the end of the period.

Segment Return on Assets (ROA)

The segment ROA presented a pattern similar to operating profits but with more significant changes. It declined from 23.46% in 2016 to 20.65% in 2017 and further dropped to 18.47% in 2018, reflecting decreased efficiency in asset utilization. Then, an improvement was observed with ROA increasing to 20.33% in 2019, followed by a substantial rise to 27.7% in 2020. This improvement in 2020 signifies enhanced profitability relative to asset levels, aligning with the increase in operating profit.

Overall Analysis

The segment demonstrated volatility in profitability and asset efficiency from 2016 through 2018, with both operating profit and ROA declining. Starting in 2019, there was a turnaround marked by rising operating profit and improved ROA, culminating in strong performance in 2020. Asset levels remained relatively steady with a slight upward trend, supporting this growth phase. The marked increase in ROA and operating profit in 2020 suggests successful strategic or operational initiatives improving profitability and asset utilization in that year.

Operating Profit

The operating profit displayed a generally stable trend from 2016 to 2019, increasing modestly from 603 million US dollars in 2016 to 657 million US dollars in 2019. However, in 2020, there was a noticeable decline to 528 million US dollars, representing a significant reduction compared to the previous year.

Assets

Assets showed a consistent upward trend throughout the entire period under review. The asset base increased steadily from 2151 million US dollars in 2016 to 2551 million US dollars by the end of 2020, indicating ongoing growth in the segment's resources.

Segment Return on Assets (ROA)

The segment ROA remained relatively stable and high between 2016 and 2019, fluctuating slightly between 26.9% and 28.1%. In 2020, there was a marked decline to 20.7%, suggesting a reduction in the segment's efficiency in generating operating profit from its asset base during that year.

Overall Analysis

The data indicates that while asset growth was steady over the five-year period, operating profitability and return on assets experienced a downturn in 2020. This divergence suggests either operational challenges or external factors impacting profitability despite continued investment and asset accumulation. The substantial decrease in ROA highlights a less efficient use of assets in generating operating profit in the latest year examined.

Net Sales

The net sales in the personal care segment exhibited relative stability over the period from 2016 to 2020, with values fluctuating narrowly between approximately 9,000 million and 9,340 million US dollars. Notably, there was a slight increase from 9,046 million in 2016 to 9,339 million in 2020, indicating a modest upward trend in revenue generation within this segment.

Assets

Total assets allocated to the personal care segment showed a general upward trend over the five-year period. Starting at 6,141 million US dollars in 2016, assets grew steadily with minor fluctuations, reaching a significant increase to 8,486 million in 2020. This represents overall growth in asset investment or accumulation within the segment.

Segment Asset Turnover

The segment asset turnover ratio, which measures the efficiency of asset utilization in generating sales, showed a declining trend throughout the period. It decreased from 1.47 in 2016 to 1.1 in 2020, suggesting that despite the growth in assets, the segment's ability to generate sales from these assets has diminished. This decline points to reduced operational efficiency or possibly the impact of asset base expansion outpacing sales growth.

Summary of Trends

Overall, the personal care segment demonstrated steady net sales alongside increasing assets, which led to a decrease in asset turnover ratio. The data indicate that while the segment expanded its asset base, the growth in sales did not keep pace proportionally, resulting in lower efficiency in asset utilization over the observed period.

Net Sales

Net sales for the segment show a relatively stable trend from 2016 to 2019, fluctuating slightly around the 5900 to 6000 million US dollar range. A notable increase occurs in 2020, with net sales rising to 6718 million US dollars, representing a significant growth compared to previous years.

Assets

The asset base for the segment demonstrates moderate fluctuations over the period. Assets increased from 4761 million US dollars in 2016 to 5007 million in 2017, then decreased to 4738 million in 2018. From 2018 onwards, assets show a gradual upward movement, reaching 5227 million by the end of 2020.

Segment Asset Turnover

The asset turnover ratio, which measures the efficiency of assets in generating sales, varies slightly but remains within a narrow band. It starts at 1.25 in 2016, dips to 1.18 in 2017, then rises to 1.27 in 2018. In 2019, it decreases to 1.21 before recovering to 1.29 in 2020, indicating an improvement in asset utilization during the last recorded period.

Overall Analysis

The data reveals that despite some fluctuations in asset levels and asset turnover efficiency, net sales remained relatively consistent until 2020. The sharp increase in net sales in 2020, coupled with the highest recorded asset turnover ratio, suggests enhanced operational performance or increased market demand during that year. The incremental growth in assets in the latter years supports the segment's capacity to generate higher sales.

Net Sales

Net sales exhibited an initial upward trend from 2016 to 2018, increasing from 3,150 million US dollars to 3,382 million US dollars. However, after peaking in 2018, net sales experienced a decline over the next two years, decreasing to 3,292 million US dollars by the end of 2019 and further dropping to 3,019 million US dollars in 2020. This suggests a reversal in sales growth during the latter part of the period analyzed.

Assets

Assets showed a consistent growth pattern throughout the entire period. Starting at 2,151 million US dollars in 2016, assets rose steadily each year, reaching 2,551 million US dollars by the end of 2020. This trend indicates a continued investment or accumulation of resources within the segment over these years.

Segment Asset Turnover

The segment asset turnover ratio declined over the period under review. Beginning at 1.46 in 2016, the ratio showed slight fluctuation but an overall downward trajectory, falling to 1.42 in 2017, a brief rise to 1.48 in 2018, followed by more notable declines to 1.35 in 2019 and reaching its lowest point at 1.18 in 2020. This decreasing ratio suggests reduced efficiency in generating sales from assets over time.

Capital Spending

Capital spending exhibited an overall increasing trend over the analyzed five-year period. Starting at US$421 million in 2016, it slightly decreased to US$405 million in 2017, followed by a modest increase to US$415 million in 2018. A more substantial rise occurred in 2019, reaching US$518 million, continuing to grow significantly to US$616 million by 2020.

Depreciation and Amortization

The depreciation and amortization expense showed growth from 2016 to 2019, starting at US$305 million in 2016, increasing steadily to US$324 million in 2017, and reaching a peak of US$430 million in 2019. However, a notable decline occurred in 2020, with the expense decreasing to US$347 million.

Segment Capital Expenditures to Depreciation Ratio

This ratio fluctuated throughout the period, beginning at 1.38 in 2016, then decreasing to 1.25 in 2017 and dropping below 1.0 to 0.97 in 2018, indicating capital expenditures were slightly less than depreciation that year. The ratio improved to 1.20 in 2019, and substantially increased to 1.78 in 2020, reflecting a stronger reinvestment in capital assets relative to depreciation expense during the latest year.

The annual data for the Consumer Tissue segment reveals several noteworthy trends over the five-year period from 2016 to 2020. There is a general upward movement in capital spending, with values increasing from $250 million in 2016 to a peak of $489 million in 2019, followed by a decline to $391 million in 2020. This indicates a significant investment surge in 2019, which then moderated the following year.

Depreciation and amortization expenses show a consistent upward trajectory from $280 million in 2016 to $372 million in 2019, before decreasing to $334 million in 2020. This pattern suggests increasing asset bases or capitalized costs over the years until 2019, with a slight reduction in amortization or asset base changes occurring in 2020.

The ratio of segment capital expenditures to depreciation fluctuates over the period, ranging from a low of 0.89 in 2016 to a high of 1.31 in 2019. This ratio generally stays near or above 1.0 starting in 2017, indicating that capital investments frequently met or exceeded the annual depreciation expense, implying growth or renewal in asset investments. The highest ratio in 2019 corresponds with the peak capital spending, after which the ratio declines to 1.17 in 2020, still above the earlier years but suggesting a reduced rate of capital reinvestment relative to asset depreciation compared to 2019.

Overall, the data suggests a phase of increased capital investment and asset renewal culminating in 2019, followed by a moderated investment approach in 2020. Depreciation trends align broadly with investment activity, reflecting asset base expansions and subsequent maintenance levels across the timeframe analyzed.

Capital Spending Trend

Capital spending has demonstrated a consistent upward trajectory from 2016 to 2020, starting at $95 million in 2016 and increasing to $204 million by 2020. This represents more than a doubling over the five-year period, with noticeable increments each year, particularly from 2017 to 2019.

Depreciation and Amortization Trend

Depreciation and amortization values have remained relatively stable across the same period, fluctuating slightly between $111 million and $121 million. There was a minor peak in 2018 with $121 million, followed by a decline to $111 million in 2019 and 2020.

Segment Capital Expenditures to Depreciation Ratio

The ratio of segment capital expenditures to depreciation has increased substantially, beginning at 0.82 in both 2016 and 2017 and rising sharply to 1.84 in 2020. This indicates that capital spending has grown at a faster pace than the depreciation expense, potentially reflecting expansion or investment in new assets beyond the rate of asset aging or usage reflected in depreciation.

Overall Insights

The upward trend in capital spending coupled with relatively stable depreciation suggests that the segment is likely investing heavily in new assets or upgrading existing infrastructure. The increasing capital expenditures relative to depreciation may imply an anticipation of future growth or capacity enhancement. The steadiness in depreciation suggests no significant asset write-downs or accelerated depreciation policies during this timeframe. These patterns indicate a strategic focus on expanding or modernizing the segment's asset base.