Kimberly-Clark is a global company that supplies adult care, feminine care, baby and child care products such as diapers, wipes, tissues, and sanitary pads under well-known brands such as Kleenex, Scott, Huggies, and Kotex in 175+ countries worldwide. Listed on the NYSE, it has a market capitalisation of US$ 40.8 billion. Here, I’ll list down 7 things to know about Kimberly-Clark before investing: 


1. Kimberly-Clark Earned on Average US$ 2 billion per annum. 

Kimberly-Clark had recorded marginal growth in its revenues to US$ 20.2 billion in 2022 after having maintained at US$ 18+ billion per year in 2016-2019. In the 7-year period (2016-2022), Kimberly-Clark had earned US$ 1.5-2.5 billion a year as it kept its net profit margin (NPM) at around 8%-12%.

Source: Kimberly-Clark


2. It Made US$ 3 billion a year in Operating Cash Flows

In 2016-2022, Kimberly-Clark generated US$ 21.1 billion in operating cash flows and of which, it spent mainly: 

  • US$ 6.4 billion on capital expenditures. 
  • US$ 3.6 billion on net acquisition of treasury shares (share buybacks)
  • US$ 10.0 billion in dividend payments to shareholders. 

Source: Kimberly-Clark 


3. It Can Repay its Long-Term Debt in 2-3 Years

In Q3 2023, Kimberly-Clark has US$ 7.4 billion in long-term debt. It is capable of repaying this debt in 2-3 years based on its long-term track record of bringing in US$ 2.5-3.5 billion a year in operating cash flows. 


4. Kimberly-Clark’s Cash Conversion Cycle is Negligible. 

Kimberly-Clark lowered its cash conversion cycle from 14 days in 2016 to zero in 2020-2022. This means the company does not need to hold any working capital to run its businesses as they are funded efficiently by its clients, debtors, and as well as creditors. As such, more capital could be allocated to generate wealth to benefit shareholders. In the case for Kimberly-Clark, it had chosen to pay out its operating cash flows, mostly, in the form of dividends to its shareholders. 

Calculated from Data Sourced from Kimberly-Clark


5. It Bought 100% of Softex Indonesia for US$ 1.2 billion in 2020.

In 2020, Kimberly-Clark acquired Softex Indonesia for US$ 1.2 billion and hence enabled the company to tap into Indonesia, which has the sixth biggest diapers market in the world. Softex Indonesia was #2 in market position for diapers and adult care and #3 in market position in feminine care in Indonesia. 

From its press release, Sofitel Indonesia’s contributions to Kimberly-Clark would remain immaterial based on Sofitel Indonesia’s 2019 net sales (US$ 420 million) was around 2% of Kimberly-Clark’s revenues of US$ 19.1 billion. 

Apart from this acquisition, Kimberly-Clark acquired 58% stake in Thinx which is an industry leader in reusable period and incontinence underwear for a total of US$ 181 million in February 2022. Then, in December 2022, Kimberly-Clark had disposed of its Neve tissue brand and K-C Professional tissue assets in Brazil for US$ 175 million. 


6. Kimberly-Clark’s P/E Ratio Averages 22.4 in 2016-2022. 

Kimberly-Clark’s stock price had hovered at around US$ 120-140 a share. This is in line with its stagnant growth in net income during the period. The company’s P/E Ratio averages 22.4 during the 7-year period. 

Calculated from Data Sourced from Kimberly-Clark


7. Its Dividend Yield Averages 3.26% a Year in 2016-2022. 

Kimberly-Clark grew its dividends per share (DPS) from US$ 3.68 in 2016 to US$ 4.64 in 2022. Its gross dividend yields had maintained at 3.0%-3.5% per annum. 

Source: Kimberly-Clark

Calculated from Data Sourced from Kimberly-Clark

Conclusion: 

Kimberly-Clark is a global business which owns global brands that are leaders in adult care, feminine care, baby, and child care products worldwide. For the past 7 years, the company delivered stable revenues, net income and operating cash flows. This includes periods throughout the COVID-19 pandemic as its products are necessities in both times of normalcy and in crisis. Thus, Kimberly-Clark had retained its status as a Dividend Aristocrat in the S&P 500. 

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Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in KCLau.com in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with KCLau.com. Co-Founded DividendVault.com, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

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