Kenvue (US:KVUE)2024-08-06 20:20Financial Performance - Kenvue reported net sales of $15.4 billion for the fiscal year 2023, making it the world's largest pure-play consumer health company by revenue [185]. - For the fiscal three months ended June 30, 2024, net sales were $4.0 billion, a decrease of 0.3% compared to $4.011 billion for the same period in 2023 [204]. - Gross profit for the fiscal three months ended June 30, 2024, was $2.365 billion, reflecting a 6.3% increase from $2.225 billion in the prior year [204]. - Operating income decreased significantly by 78.1% to $154 million for the fiscal three months ended June 30, 2024, down from $702 million in the same period last year [204]. - Net income for the fiscal three months ended June 30, 2024, was $58 million, representing an 86.5% decline from $430 million in the prior year [204]. - Total net sales for the fiscal six months ended June 30, 2024, were $7.9 billion, an increase of $31 million, or 0.4%, compared to the prior year [226]. Restructuring and Expenses - The company incurred restructuring expenses of $48 million and impairment charges of $510 million during the fiscal three months ended June 30, 2024 [204]. - The company is undergoing a multi-year restructuring initiative aimed at optimizing its cost structure and positioning for future growth [203]. - Restructuring expenses amounted to $48 million, driven by global workforce reductions and management structure changes [208]. - The company expects to incur approximately $275 million in pre-tax restructuring expenses for both fiscal years 2024 and 2025, totaling around $550 million [253]. Customer and Sales Insights - Kenvue's top 10 customers accounted for approximately 41% of total net sales for the fiscal three months ended June 30, 2024 [197]. - Segment net sales for Essential Health increased by $59 million, or 4.9%, while Skin Health and Beauty declined by $44 million, or 3.8% [215]. - Self Care Segment net sales decreased by $26 million, or 1.6%, to $1.6 billion for the fiscal three months ended June 30, 2024, primarily due to volume-related decreases of 1.3% [218]. - Skin Health and Beauty Segment net sales decreased by $44 million, or 3.8%, to $1.1 billion for the fiscal three months ended June 30, 2024, driven by volume-related decreases in the United States [220]. - Essential Health Segment net sales increased by $59 million, or 4.9%, to $1.3 billion for the fiscal three months ended June 30, 2024, with organic growth of $92 million, or 7.6% [223]. Cash Flow and Financing - Net cash flows from operating activities decreased by $817 million, or 52.9%, to $727 million for the fiscal six months ended June 30, 2024 [248]. - Net cash flows used in investing activities increased by $119 million to $237 million for the fiscal six months ended June 30, 2024 [249]. - Net cash flows used in financing activities decreased by $602 million to $816 million for the fiscal six months ended June 30, 2024 [250]. - As of June 30, 2024, the company had cash and cash equivalents of $1,014 million, a decrease of $368 million from $1,382 million as of December 31, 2023 [252]. - The company has authorized a share repurchase program to buy back up to 27 million shares, with 4.6 million shares repurchased for $91 million during the fiscal six months ended June 30, 2024 [264]. Tax and Interest - The worldwide effective income tax rate decreased to 10.8% for the fiscal three months ended June 30, 2024, down from 32.7% in the prior year [211]. - Interest expense increased by $39 million to $92 million, influenced by prior interest income recognized in the same period last year [210]. - Interest expense, net for the fiscal six months ended June 30, 2024, was $187 million, primarily related to Senior Notes and Commercial Paper [261]. Risk Management - The company is exposed to inflationary pressures affecting raw materials and supply chain costs, which may impact future financial performance [271]. - The company manages interest rate risk through a mix of variable and fixed-rate debt, aiming for a cost-effective portfolio [272]. - The company is exposed to commodity price risks from various inputs, including resins, pulp, corn derivatives, and energy, and employs strategic pricing mechanisms to manage these costs [273]. - Credit risk is mitigated through diverse customer bases and credit evaluations, although current macroeconomic conditions may complicate receivable collections [274].