Kenvue Inc (KVUE) Q3 2024 Earnings Call Highlights: Navigating Growth Amidst Market Challenges

GuruFocus News
4 min read

In This Article:

  • Organic Growth: 0.9% year-over-year.

  • Adjusted Diluted Earnings Per Share: $0.28.

  • Adjusted Gross Margin Expansion: 130 basis points to 60.7%.

  • Self-Care Organic Sales Growth: 0.7%.

  • Essential Health Organic Sales Growth: 4.5%.

  • Skin Health and Beauty Organic Sales Decline: 2.7%.

  • Net Interest Expense: $96 million for the quarter.

  • Adjusted Effective Tax Rate: 28.9% for the quarter.

  • Adjusted Net Income: $542 million for the quarter.

  • Full Year Organic Growth Expectation: Towards the low end of 2% to 4% range.

  • Full Year Adjusted Diluted EPS Outlook: $1.10 to $1.20.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Kenvue Inc (NYSE:KVUE) delivered year-over-year organic growth of 0.9% in Q3 2024, despite a softer top line.

  • The company achieved strong productivity improvements, resulting in an adjusted gross margin expansion of 130 basis points compared to last year.

  • Kenvue Inc (NYSE:KVUE) is on track to invest approximately 20% more in marketing in 2024, focusing on social media and analytics-driven strategies.

  • The company is making progress in exiting TSAs, with nearly three-quarters exited and on track to fully exit by mid-2025.

  • Kenvue Inc (NYSE:KVUE) is implementing a new playbook to strengthen its market presence, with early positive results in self-care and essential health segments.

Negative Points

  • Organic sales in the skin health and beauty segment declined by 2.7% year-over-year, impacted by a muted sun season and challenging dynamics in China.

  • The company is facing slower category dynamics in allergies and pediatric fever, affecting self-care segment growth.

  • Kenvue Inc (NYSE:KVUE) has lowered its full-year 2024 organic growth guidance to the low end of the 2% to 4% range due to slower recovery in skin health and beauty.

  • The U.S. market is experiencing a deceleration in the skincare category, which is expected to continue into Q4.

  • Despite improvements, the company acknowledges that the recovery of its U.S. skin health business will not be immediate or linear.

Q & A Highlights

Q: Can you provide more color on the drivers of your updated organic sales growth guidance for Q4? A: Thibaut Mongon, CEO: We expect Q4 to be our strongest growth quarter due to the cumulative impact of our new playbook and easier year-over-year comparisons. Factors like last year's destocking and portfolio rationalization won't repeat, providing tailwinds. However, we are seeing a late start to the cold and flu season, which is a challenge.

Recommended Stories