Kimberly-Clark (NYSE: KMB) reported Q4 EPS of $1.57, $0.02 better than the analyst estimate of $1.55. Revenue for the quarter came in at $4.58 billion versus the consensus estimate of $4.59 billion.

2018 Outlook and Key Planning Assumptions

The company's key planning and guidance assumptions for 2018 are as follows:

• Net sales increase of 1 to 2 percent.
  • Organic sales are expected to increase approximately 1 percent, driven by higher volumes. Changes in net selling prices and product mix are expected to be similar, or up slightly, year-on-year.
  • Changes in foreign currency exchange rates are anticipated to have a neutral to 1 percent positive impact on net sales, and the acquisition of the company's joint venture in India should benefit sales slightly.
• Adjusted operating profit growth of 2 to 5 percent.
  • Cost savings of approximately $400 million from the FORCE program and $50 to $70 million from the 2018 Global Restructuring Program.
  • Inflation in key cost inputs of $300 to $400 million. A majority of the inflation is anticipated to occur in international markets. In North America, the company is assuming market prices of $1,050 to $1,100 per metric ton for eucalyptus pulp and mid-$50's to low-$60\'s per barrel for oil.
• Interest expense down approximately 20 percent, including benefits from redeeming, in December 2017, $500 million of notes originally due in late 2018.
• Adjusted effective tax rate of 23 to 26 percent.
• Net income from equity companies similar, or up slightly, year-on-year.
• Adjusted earnings per share of $6.90 to $7.20, up approximately 11 to 16 percent compared to $6.23 in 2017.
• Capital spending of approximately $1.1 billion. Dividend increase of 3.1 percent (approved by the Board of Directors and mentioned previously in this release). The quarterly dividend will increase to $1.00 per share, up from $0.97 per share in 2017. The first dividend will be payable on April 3, 2018 to stockholders of record on March 9, 2018.
• Share repurchases between $0.7 and $0.9 billion, subject to market conditions.

GUIDANCE:

Kimberly-Clark sees FY2018 EPS of $6.90-$7.20, versus the consensus of $6.60.

Executive Summary

• Fourth quarter 2017 net sales of $4.6 billion increased 1 percent compared to the year-ago period and full-year 2017 net sales of $18.3 billion rose slightly.
• Diluted net income per share for the fourth quarter was $1.75 in 2017 and $1.40 in 2016. Full-year diluted net income per share was $6.40 in 2017 and $5.99 in 2016.
• Fourth quarter adjusted earnings per share were $1.57 in 2017 and $1.45 in 2016. Adjusted earnings per share exclude certain items described later in this news release.
• Full-year adjusted earnings per share were $6.23 in 2017, up 3 percent compared to $6.03 in 2016. The company\'s previous guidance was for earnings at the low end of the $6.20 to $6.35 range.
• The company has established a cost savings target of more than $1.5 billion over the 2018 to 2021 time period from its ongoing FORCE (Focused On Reducing Costs Everywhere) program.
• In addition, the company announced a new 2018 Global Restructuring Program to reduce the company\'s structural cost base by streamlining and simplifying its manufacturing supply chain and overhead organization. The restructuring is expected to generate annual cost savings of $500 to $550 million by the end of 2021 and accelerate the company\'s return to delivering its long-term growth objectives over time.
• Net sales in 2018 are expected to increase 1 to 2 percent. Diluted net income per share for 2018 is anticipated to be $3.90 to $4.50, including charges related to the restructuring. Adjusted earnings per share in 2018 are expected to be $6.90 to $7.20, a year-on-year increase of approximately 11 to 16 percent.
• The company's Board of Directors has approved a 3.1 percent increase in the quarterly dividend for 2018, which is the 46th consecutive annual increase in the dividend.

2018 Global Restructuring Program - Overview

The 2018 Global Restructuring Program is expected to reduce Kimberly-Clark's structural cost base and enhance the company's flexibility to invest in its brands, growth initiatives and capabilities critical to delivering future growth. The program will make Kimberly-Clark's overhead organization structure and manufacturing supply chain less complex and more efficient. Over time, the program is expected to accelerate the company's return to delivering sales and earnings growth in line with its Global Business Plan objectives and further enhance long-term shareholder value.

The company expects the program will generate annual pre-tax cost savings of $500 to $550 million by the end of 2021. Savings will be driven by workforce reductions, which are anticipated to be in a range of 5,000 to 5,500 (12 to 13 percent of current headcount), along with manufacturing supply chain efficiencies. The program is expected to broadly impact all of the company's business segments and organizations in each major geography. The savings are incremental to the company's ongoing FORCE cost savings program.

The company expects to close or sell approximately 10 manufacturing facilities and expand production capacity at several others to improve overall scale and cost. As part of the program, Kimberly-Clark expects to exit or divest some low-margin businesses that generate approximately 1 percent of company net sales. The sales are concentrated in the consumer tissue business segment.

To implement the restructuring program, the company expects total cash spending of $1,500 to $1,700 million by the end of 2020, consisting of $900 to $1,000 million in pre-tax cash restructuring charges and approximately $600 to $700 million in incremental capital spending.

The company also expects to incur non-cash restructuring charges of $800 to $900 million pre-tax by the end of 2020, making the total expected restructuring charges $1,700 to $1,900 million pre-tax ($1,350 to $1,500 million after-tax). Restructuring charges in 2018 are anticipated to be $1,200 to $1,350 million pre-tax ($950 to $1,050 million after tax). The company will exclude the restructuring charges when it reports adjusted results in future periods.

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