Kimberly Clark
...2421.9-2529.6 (107.7)/2529.6 (4.23)% Interest Expense 191.6-221.8 (30.2)/221.8 (13.62)% EBIT OI 2421.9 +NOI 41.85 -NOE 41.85=2421.9OI 2529.6+NOI 104.2-NOE 0=2633.82421.9-2633.8 $(211.9) (211.9)/2633.8 $(107.7) Net Income 1609.9-1800.6 $(190.7) (190.7)/1800.6 $(30.2) EBITDA 2421.9-41.85+(650.2+89.4)=3119.652633.8-0+(591.7+81.7)=3307.23119.65-3307.2 $(187.55) (187.55)/3307.2 (5.67)% B. Profitability Ratios Ratios 2001 % 2000 % Gross Margin 5908.9/14524.4 40.68% 5753.5/13982.0 41.15% Operating Margin 2421.9/14524.4 16.67% 2529.6/13982.0 18.09% EBIT Margin 2421.9/14542.4 16.67% 2633.8/13982.0 18.84% Interest Cov 2421.9/(191.6) (12.64)% 2633.8/(221.8) (11.87)% Net Margin 1609.9/14524.4 11.08% 1800.6/13982.0 12.88% EBITDA Margin 3119.65/14524.4 21.48% 3307.2/13982.0 23.65% C. Analysis of Financial Performance Kimberly-Clark is the world’s highest selling tissue products company, is principally engaged in the manufacturing and marketing throughout the world of wide range products for personal, business, and industrial uses. The company is organized into three global business segments: Tissue, Personal Care, Business to Business (Healthcare and Other). A brief analysis of the company’s global segments as a whole shows that net sales increased 3.88% to $14.52 billion. Net Income fell by 10.59% to $1.61 billion. Revenues reflect increased total sales volumes and the acquisition of Kimberly-Clark Australia. Earnings were than offset by higher net unusual items. To go more into detail about the segments the decline in earnings before unusual items was due primarily to lower sales and earnings for the company’s operations in Argentina and Brazil and for the most of the company’s Business-to-Business operations in the U.S. from difficult economic conditions. Looking at Operating Profit among the segments we see that the operating profit from Personal Care segment decreased from $1141.9 in 2000 to $1119.5 in 2001 before unusual items, this decrease was because of the weakness in Argentina and Brazil. The Consumer Tissue segment showed solid improvements in Operating Income and sales as a result of lower selling prices, before unusual items. Although, Operating profit for the business-to-business segment decreased as a result of North America’s economic downturn, Healthcare sales and operating profit increased. The unusual items consist of charges for business integration, improvements, and other programs. It is important to understand that these items are unusual and are not to be reasonably expected to recur in the future. These items either have a positive or negative (gain or loss) to operating profit of the company. In conclusion, sales increased and operating profit decreased before unusual items were added, which is a key issue! So if we look at the Trend Analysis, Profitability ratios all of which do not include unusual items, we see that the percentages have all decreased. 3 Financial Position And ROE (Dupont Analysis) A. 1. DuPont (ROE)= NI/Sales * Sales/ Total Assets Average * Total Assets Average/Average Common Equity 2001 1609.9/14524.4*14524.4/((15007.3+14479.8)/2)*((15007.3+14479.8)/2)/((5646.9+5767.30)/2) = 28.21% 2000 1800.6/13982.0*13982.0/((14479.8+12815.5)/2)*((14479.8+12815.5)/2)/((5767.3+5093.1)/2) = 33.16% 3A2 The profitability ratio and the Activity ratio showed little change over the fiscal 2000 to 2001. The asset/equity ratio showed the most change from 2.51 in 2000 to 2.58 in 2001. This capital structu...