Mixed results for major suppliers.

 

Jan/san and hygiene vendor Kimberly-Clark Professional (KCP) grew its margins in FY2023 despite a downward trend in volumes.

 

KCP sales for the year were US$3.4 billion, a year-on-year organic increase of seven per cent as the positive impacts of price and mix more than offset a five per cent drop in volumes. 

 

Operating profit jumped by 46 pr cent to US$665 million, with the company saying the restoration of operating margin is enabling further investments in key product initiatives to fuel growth.

 

These investments – which include driving a better customer experience and sustainable solutions – had a negative effect on the bottom line in the fourth quarter, as operating profit fell by seven percent year-on-year. At the same time, organic sales were down by one per cent, partly due to a “sharpened strategic focus” on more attractive category segments as well as wholesale inventory levels.

 

For the first quarter of 2024, KCP is expecting volumes to remain subdued, but is forecasting improved trends as the year progresses.

 

Q4 sales at 3M’s stationery and office unit fall again

 

Following on from last year’s 6.2 per cent reported decline, revenue at 3M’s Stationery & Office in the last three months of 2023 was US$315 million, a drop of 8.7 per cent. 

 

3M’s Consumer division – where Stationery & Office sits – posted Q4 2023 sales of US$1.2 billion, an organic decline of 2.2 per cent versus the previous year - driven by continued softness in consumer discretionary spend.

 

However, operating profit was up four per cent to US$221 as the supplier implemented restructuring and portfolio ‘optimisation’ actions and kept a tight rein on costs.

In the Q4 earnings conference call, 3M CEO Mike Roman said five per cent of the consumer product portfolio had been earmarked for exit. This is expected to have a $100 million impact on the top line across all of the division’s business units in 2024.

 

3M’s share price fell by almost 12 per cent yesterday as investors were spooked by a weaker-than-expected 2024 outlook, and the debt financing of the US$6 billion combat earplugs and US$10 billion PFAS litigation settlements.

 

Xerox ends 2023 on a low

 

The top and bottom lines at Xerox took a hit in the final quarter of 2023.

 

The OEM’s sales in Q4 were US$1.76 billion, a constant currency decline of 10.6 per cent. 

 

Post-sale revenue was down 7.5 per cent to around US$1.3 billion while equipment tumbled by 18.3per cent to US$458 million. The Americas region (about 65% of the total) declined by 10.1 per cent and EMEA fell by nine per cent.

 

Xerox sales in Q4 of 2022 had risen sharply as supply chains returned to normal, so there was a relatively tough comparison this year. However, the company noted a softening of demand in European markets and a weaker-than-expected level of order activity among its distribution partners due to tighter global financial conditions.

 

The vendor added that lower sales of “non-strategic and lower margin” products such as paper contributed to the decline in post-sale revenue, and it appears Xerox plans to de-emphasise the paper category. Other headwinds included the exit of Russia, the termination of the Fuji royalty and the absence of revenue from PARC, the research centre that Xerox gave away last year.

 

For the full year, Xerox generated revenue of US$6.89 billion, a year-on-year decrease of 3.3 per cent in constant currencies. 

 

For more global financial news from OPI, go to https://www.opi.net/news/region/001-north-america/xerox-ends-2023-on-a-low/