Toilet roll mania boosts sales of Andrex maker Kimberly-Clark
Panic buying ahead of the coronavirus lockdown has been a boon for Kimberly-Clark, the Dallas-based company behind Kleenex tissues and the Andrex and Scott toilet roll brands.
Michael Hsu, chief executive, said the group was working “flat out” to meet a surge in demand, which helped first-quarter revenues at Kimberly-Clark’s consumer tissues division rise 13 per cent from a year ago.
While coronavirus disruption had caused “a few sporadic outages” in its supply chain, he said much of the business was producing record output.
Bathroom and facial tissue volumes in North America had been particularly strong, and while Mr Hsu recognised some of the upswing was temporary he expected sales to be higher for several weeks as retailers replenish stock.
Stockpiling in advance of movement restrictions brought in to contain the spread of Covid-19 was only partly responsible for the higher sales, he added. Housebound consumers were also using more of Kimberly-Clark’s products.
“With more people at home and also paying closer attention to personal hygiene, it’s likely consumer tissue consumption will be higher,” he said.
The results from Kimberly-Clark, whose net sales of $5bn in the first quarter were 11 per cent more than a year ago on an organic basis, are the latest sign that some companies are benefiting from the huge changes in consumer behaviour during the pandemic, even as others fight for survival.
Procter & Gamble last week reported its biggest rise in US revenues in decades after demand for cleaning products surged.
Despite its strong first quarter, Kimberly-Clark joined other big companies in withdrawing its financial guidance for the full year and also suspended share buy backs, citing the coronavirus uncertainty.
Maria Henry, chief financial officer, said: “Nobody really knows what this has in store for us and what the impacts will be.”
Shares in the New York-listed company, which have been trading just shy of all-time highs, dipped 0.6 per cent, giving a market capitalisation $47bn.
As well as its consumer facing business, Kimberly-Clark also fits out companies from hotels to factories with products including tissues, towels, and sanitisers through its K-C Professional segment.
Executives cautioned they expected a decline in the weeks ahead at the division, which accounts for almost a fifth of the group’s annual sales. Office usage had declined 80 per cent, according to the company’s data.
“Given the economic shock that’s occurred and with much of the population staying at home, K-C Professional is likely to face volume declines,” Mr Tsu said.
However, he said the group’s line-up of essential products, which also include Huggies nappies and Kotex tampons, left it “well positioned for the recession”.
Net income in the three months to the end of March of $675m, equivalent to $1.92 per diluted share, compared with $466m last year.