Analysis of Geographic Areas
Kimberly-Clark Corp. operates in 2 regions: North America and Outside North America.
Area Profit Margin
Kimberly-Clark Corp., profit margin by geographic area
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | |
|---|---|---|---|---|---|
| North America | 25.87% | 25.07% | 23.24% | 24.31% | 24.33% |
| Outside North America | 13.54% | 12.55% | 12.18% | 14.05% | 14.00% |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
An analysis of geographic profit margins reveals a persistent disparity in profitability between the North American and international segments, though both regions exhibit correlated performance trends over the five-year period ending December 31, 2020.
- North American Margin Performance
- The North American region demonstrated an overall upward trajectory, concluding the period at its highest margin of 25.87%. Following a period of stability between 2016 and 2017, the margin contracted to 23.24% in 2018. This was followed by a strong recovery in 2019, where margins rose to 25.07%, with further expansion observed through the end of 2020.
- Outside North America Margin Performance
- Profit margins for areas outside North America remained consistently lower and showed higher relative volatility. After a slight increase to 14.05% in 2017, a notable decline occurred in 2018, with margins dropping to 12.18%. While a gradual recovery was observed in 2019 and 2020, the closing margin of 13.54% failed to return to the 2016 baseline of 14.00%.
- Comparative Regional Analysis
- A significant profitability gap is maintained between the two geographic segments, with North American margins exceeding those of the international segments by approximately 11 to 12 percentage points. The synchronized dip in profitability observed across both regions in 2018 suggests the influence of systemic global factors or overarching corporate operational headwinds during that fiscal year.
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Area Profit Margin: North America
Kimberly-Clark Corp.; North America; area profit margin calculation
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating profit | 2,689) | 2,441) | 2,215) | 2,283) | 2,322) |
| Net sales | 10,394) | 9,735) | 9,532) | 9,390) | 9,545) |
| Area Profitability Ratio | |||||
| Area profit margin1 | 25.87% | 25.07% | 23.24% | 24.31% | 24.33% |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Area profit margin = 100 × Operating profit ÷ Net sales
= 100 × 2,689 ÷ 10,394 = 25.87%
The North American segment exhibits a positive trajectory in both revenue and profitability over the five-year period ending December 31, 2020. While the period between 2016 and 2018 was characterized by relative stagnation and a slight decline in operational efficiency, the subsequent two years demonstrate a robust recovery and expansion in margins.
- Net Sales Trends
- Net sales remained relatively stable from 2016 to 2018, fluctuating between $9.39 billion and $9.54 billion. A growth phase commenced in 2019, culminating in a significant increase to $10.39 billion by 2020, marking the highest revenue level recorded in the observed period.
- Operating Profit Performance
- Operating profit experienced a gradual decline from $2.32 billion in 2016 to a low of $2.22 billion in 2018. This downward trend was reversed in 2019, with profit rising to $2.44 billion, and further accelerating to $2.69 billion in 2020, reflecting a strong recovery in earning capacity.
- Area Profit Margin Analysis
- The area profit margin remained consistent at approximately 24.3% through 2017 before contracting to 23.24% in 2018. Following this dip, the margin expanded significantly, reaching 25.07% in 2019 and peaking at 25.87% in 2020. This upward trend suggests enhanced operational efficiency and a successful optimization of the cost structure relative to sales growth.
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Area Profit Margin: Outside North America
Kimberly-Clark Corp.; Outside North America; area profit margin calculation
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Operating profit | 1,221) | 1,127) | 1,127) | 1,291) | 1,255) |
| Net sales | 9,018) | 8,981) | 9,256) | 9,186) | 8,964) |
| Area Profitability Ratio | |||||
| Area profit margin1 | 13.54% | 12.55% | 12.18% | 14.05% | 14.00% |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Area profit margin = 100 × Operating profit ÷ Net sales
= 100 × 1,221 ÷ 9,018 = 13.54%
Financial performance outside North America between 2016 and 2020 is characterized by a mid-period contraction in profitability followed by a gradual recovery. While net sales remained relatively stable, oscillating around the 9 billion USD mark, operating profit and margins experienced a notable decline in 2018 before trending upward toward the end of the period.
- Net Sales Trends
- Revenue demonstrated an initial growth phase, rising from 8,964 million USD in 2016 to a peak of 9,256 million USD in 2018. A subsequent decline occurred in 2019, with sales dropping to 8,981 million USD, followed by a marginal increase to 9,018 million USD in 2020.
- Operating Profit Analysis
- Operating profit peaked at 1,291 million USD in 2017. A contraction followed, with profits falling to 1,127 million USD in 2018 and remaining flat through 2019. A recovery trend emerged in 2020, as operating profit rose to 1,221 million USD.
- Area Profit Margin Performance
- The profit margin remained stable at approximately 14% during 2016 and 2017. A significant reduction to 12.18% was recorded in 2018, marking the lowest point of operational efficiency in the analyzed period. From 2019 onward, a consistent recovery is observed, with the margin climbing to 12.55% and then to 13.54% by the end of 2020.
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Net sales
Kimberly-Clark Corp., net sales by geographic area
US$ in millions
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | |
|---|---|---|---|---|---|
| North America | 10,394) | 9,735) | 9,532) | 9,390) | 9,545) |
| Outside North America | 9,018) | 8,981) | 9,256) | 9,186) | 8,964) |
| Intergeographic sales | (272) | (266) | (302) | (317) | (307) |
| Total | 19,140) | 18,450) | 18,486) | 18,259) | 18,202) |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
Total net sales exhibited a gradual upward trajectory between 2016 and 2020, increasing from 18,202 million USD to 19,140 million USD. This growth was primarily driven by strong performance within the North American market, while international markets remained relatively stagnant over the same period.
- North American Market Performance
- Net sales in North America demonstrated a positive growth trend, rising from 9,545 million USD in 2016 to 10,394 million USD in 2020. Despite a slight contraction in 2017, the region experienced consistent annual growth from 2018 onward, culminating in a significant increase of approximately 6.6% between 2019 and 2020.
- Outside North American Market Performance
- Sales outside of North America showed a pattern of fluctuation without a definitive long-term growth trend. After an initial increase from 8,964 million USD in 2016 to a peak of 9,256 million USD in 2018, net sales declined in 2019 and remained nearly flat in 2020 at 9,018 million USD. This indicates a stagnation in international revenue growth compared to the domestic market.
- Intergeographic Sales and Total Consolidation
- Intergeographic sales remained consistently negative throughout the five-year period, fluctuating between -317 million USD and -266 million USD. These offsets had a minimal impact on the overall growth trend. The shift in geographic contribution is evident as North America's share of total net sales increased, moving from approximately 52% of total sales in 2016 to roughly 54% by 2020.
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Operating profit
Kimberly-Clark Corp., operating profit by geographic area
US$ in millions
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | |
|---|---|---|---|---|---|
| North America | 2,689) | 2,441) | 2,215) | 2,283) | 2,322) |
| Outside North America | 1,221) | 1,127) | 1,127) | 1,291) | 1,255) |
| Corporate & Other | (720) | (787) | (1,112) | (248) | (252) |
| Other income and (expense), net | 54) | 210) | (1) | (27) | (8) |
| Total | 3,244) | 2,991) | 2,229) | 3,299) | 3,317) |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
The operating profit performance between 2016 and 2020 is characterized by a period of stability, a sharp contraction in 2018, and a subsequent recovery toward pre-2018 levels. Total operating profit decreased from 3,317 million US$ in 2016 to a low of 2,229 million US$ in 2018, before ascending to 3,244 million US$ by the end of 2020.
- North American Geographic Performance
- North America serves as the primary contributor to total operating profit. After a slight decline from 2,322 million US$ in 2016 to 2,215 million US$ in 2018, the region experienced accelerated growth, reaching 2,689 million US$ by 2020. This upward trajectory in the final two years indicates a strengthening of the core domestic market.
- Outside North American Geographic Performance
- Operating profit from regions outside North America exhibited higher volatility and lower growth compared to the domestic market. Profits peaked at 1,291 million US$ in 2017 before declining and plateauing at 1,127 million US$ during 2018 and 2019. A recovery to 1,221 million US$ was observed in 2020, though it remained below the 2017 peak.
- Corporate and Other Expenses
- A significant impact on overall profitability occurred in 2018, driven by a sharp increase in Corporate & Other expenses, which rose to 1,112 million US$ from 248 million US$ in the prior year. This spike is the primary driver behind the decline in total operating profit for that period. These costs were gradually reduced in the following years, descending to 720 million US$ by 2020.
- Other Income and Expense Trends
- This component remained relatively immaterial and predominantly negative between 2016 and 2018. However, a notable shift occurred in 2019, where the item contributed a positive 210 million US$, followed by 54 million US$ in 2020, providing a modest boost to the total operating profit during the recovery phase.
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