KMB - Earnings call transcript Q3 2017 | Kimberly-Clark Corporation

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Operator

Ladies and gentlemen, thank you for your patience in holding. We now have your speakers in conference. [Operator Instructions]. It is now my pleasure to introduce Mr. Paul Alexander.

Paul Alexander

morning, to good Earnings Third and Call. Conference you, everyone, Kimberly-Clark's welcome Quarter Thank are Chairman Henry, Tom Hsu, today us With Falk, Chief Officer; President and Operating and CFO. Maria our and Mike CEO;

of our for And agenda we'll full then will a Tom call. Here's the third perspectives outlook the results. on our quarter his year. Q&A. and start finish Maria with with review results provide the will for

a have section presentation of in materials Investors website. we today's of the our usual, As

be forward-looking Form XXXX latest lastly, Maria. I'll now statements morning's will further see we which Risk Factors over our comparing it Please results turn And reminder, of the adjusted this results, news annual exclude a As release. our making XXXX we'll to be information. XX-K certain And today. to in section items on report for described

Maria Henry

Thanks, call the for Paul. today. thanks morning, Good joining everyone,

start Let headlines third the me with the quarter. for

growth territory savings environment. to cash to returned positive continue and to reduced shareholders. our growth and achieved deliver We we discretionary spending sales returned We and challenging significant earnings excellent a in cost

details, at Now starting the with sales. let's look

strong color cost On cost Our and and our $XXX Helping just margin This that third pricing outlook were million. $X.X our of more sales rose slightly to $XXX savings. inflation to lower million. $XXX our somewhat teams down as of now savings third FORCE line offset billion, were cost full top savings, higher sales previous our was profitability, Commodities minutes. more million significant drag XX expect year inflation slightly, million third the quarter and above that's to quarter estimates quarter will polymer be quarter, a cost deliver in inflation, we pulp with will and XX.X%, $XXX continue provide X% few resin. for includes year-on-year. in Tom than points input up net Organic on gross offset basis estimate

spending down year-on-year. was Between-the-lines the down XX points P&L. Moving basis

mentioned this we on in our July, spending managing call in we're environment. earnings tightly discretionary As overhead and

quarter I'm encouraged with K-C XX.X%, developing Care operating XX segments our Our we basis overall. Personal margin up and emerging third and was the in markets the and improvements in achieved Professional margin points business year-on-year.

bottom $X.XX, On X% better slightly tax reduced year-on-year. line, quarter share, worth share amount. a earnings per by the rate third earnings equity up income $X.XX same about about was Lower by the offset per effective

Now was in operations strong with and let's $XXX turn $XXX cash third quarter improvements. million line in quarter provided and the by year-ago million included in flow Cash to expectations. flow. was capital very Cash the our working

spending that to cash capital pleased we third share tightly million. million to in make $XXX capital spending year more Our managing to and was year full important totaled million $XXX below X that quarter payment area. will allocation, good this working and target this I'm We're XXXX On quarter environment, days dividend be $XXX third than slightly expect more repurchases our range. down also our compared teams full cycle in capital continue conversion progress XXXX. even

number We full million the billion. expect $X.X total expected of and will dividends repurchases. That includes that year repurchases share share $XXX

up basis down were spending. were mostly by and at margins organic operating In X%, impacted The consumer points. XXX markets summary, by operating In difficult sales tissue working input cost ways. capital Professional, Care, managing and up K-C Looking organic sales XX.X% in basis Professional up are although from were fell margins America. improvement all elsewhere. up That segment at North environment, Organic we I'll XXX we major and were sales margins over driven In but included points. at X%, savings operating were cost and Tom. were a quarter with In XX.X%, higher up and results gains basis geographies. the in X%. organic was costs, in Care XX.X%, results. approximately comparison developing K-C growth capital the X% in Personal The sales allocate pulp. in call both the between-the-lines were reduced to costs, now benefits tissue, tightly in grow by sales to emerging XXX continue pass continue savings. shareholder-friendly Personal solid points. driven to earnings capital we spending down and strong Consumer

Thomas Falk

detail I'll of our and balance give year. conditions, line everyone. top the Maria, and I'll for and Thanks, you then address more market the sales on good outlook morning, some our

sales half markets. of organic about quarter our being find challenging fell in now our in while quarter, year. the Volumes after down year-on-year third several X%, of increased about X%. the than X% at prices more it's the to overall, large were up But net slightly right in first growth Looking selling the third

some X%, first of in tissue sales year-on-year after of by similar the organic In better in same were consumer the of at brands. first elevated total that relatively the being quarter, point half our in, we the those key adult third down in America, consumer than grow year. the America, X category about that's activity. competitive In by looking the market that North So categories X% year. North and Volumes the conditions care half grew led including X% difficult, did businesses and our markets. in compete In remain rose consumer

prices on X% strategies of activity On of July. some the promotion fine-tuning as result our competitive earnings and call mentioned fell other we the hand, in of that our a net selling

X%. and challenging environment. down were In at our volumes mega in care America. individual Personal our category, digits a Looking in continued infant mid-single were North businesses child volumes care the off

third as better and and fourth other high in more Now activities the Volumes have we in care in quarter. promotion comparisons increased we expect ease performance quarter the brand adult planned. single-digits

the of in the following volumes half X Poise XX Depend benefited from year-ago support of a behind benefited over nicely first to last X% merchandising we've promotional and Our We Consumer -- category from growth, period. from performance brands brands increased that soft execution comparison tissue some and the marketing the and from our in and promotion America increased from months. innovations North stronger launched these and a calendar, year. good by a difficult rebounded in

relatively our volume America. business categories driven Professional to third in executing quarter. That team of outside North Organic was X%. Volumes X% its product a sales is in quarter. in growth markets by the rose K-C up down America. all in strategies North now as sales X% our Turning major growth were the well to of market. were developed Switching Organic sluggish in

of as driven country. including birthrate Korea, was significant South decline diapers, conditions a where in the that a decline that result of in category in by are All challenging

Moving and sales third volume were markets. the to emerging quarter, including X%. developing Organic in up of growth X%

In there. at sales similar care of Brazil, Looking organic our year-on-year. some were key in personal markets

and continue the volumes with we real stronger feminine benefits double-digit Brazilian mid-single down, China, as in with to activity. care. from though, up organic prices came adjusted digits Our innovation were in sales personal to growth grow In the across portfolio. competitive strong Selling care

on year. personal to product sales very were selling will selling activity driven be personal we negative to comparisons diapers were in strong forward, prices. year continue Argentina and demand Our end somewhat in going to continue less Diaper China though grow double up than volumes by last it digits, is Eastern solutions And year. in increased prices In were were China. winning care benefiting product digits. of pricing volumes in in Product lastly, then focus category sales brand in similar single the focus Argentina, year Huggies even by year-on-year. diapers' and while Organic in this Kotex is from sales this mix care improved organic growth driving impacted continues the premium down market. was on strong higher our China innovation as high down. And organic the competitive in and on Huggies still Europe, last

we strengthening Europe, continues increase in this Eastern another the double-digit rollbacks and reflecting world of of India. venture remaining Russian of mostly and of quarter, the declined the Huggies the prices momentum Our joint part XX% mention in third as end both our also Russia to we ruble. on price I'd the quarter Kotex. purchased Selling at this the following like volume achieved in

our with and small capital our this we've briefly build categories spending country. Maria's then I'll financial that I'm in team's in today, are third accomplishments in managed the to finally, year, on overhead optimistic working on this about Although quarter, especially way And growth in the our long-term say review encouraged FORCE program, cost-savings our we're the potential India then the capital and allocation.

our Now outlook and of cover I'll for XXXX. balance turn the

in full our confirming we're targets. morning's XXXX As mentioned we news year release, this previous

or will We expect slightly similar continue that up sales to year-on-year. be

will be Given more likely results year. full that through the it's months, for similar organic sales X

to earnings that per of On continue at line, the low $X.XX will expect range. the the end we to bottom share be $X.XX

estimate inflation X has commodity somewhat months ago. our noted, increased from Maria As

On plans the the reduced year. other hand, for spending discretionary we've our

In currency tax addition, and effective our for rate has outlook improved the rates slightly.

in executing on effectively and now we're we're your optimistic That about long-term shareholders. up deliver Plan the begin to Global in we'll attractive take our returns questions. near opportunities summary, to we're success and our term, our So competing focused strategies wraps for prepared Business to remarks,

Operator

[Operator Instructions].

Dibadj Ali comes question Bernstein. first with Our from

Ali Dibadj

you organic I it be to particular the is or to have longer-term and line few and, need top your business about with of I the context results in questions. what that close comfort the see the kind that. if a of you whether geographies X% you talk guess, units One you delivered can gaps, recent question. is organic the first That's X% particular range,

Thomas Falk

sure. Yes,

the in don't negative the negative that's we in Korea, explaining first a be we'd year-to-date got honest, to like of South on down Korea, to X% birthrate's When and I growth. comments, U.S. sustainable. going think guess big birthrate which in a X% have time overall couple and you've markets category think hard major the

those this and hand, in next born year is year the be and that. the after babies it On is the won't aren't or they category other it what year

which is certainly some of competitors the weakness lower lower went coming the like price similar And Russia X had as there first more a that the the as then in places category those pretty U.S., markets of and big category. environment, out a negative in as had markets. like half couple or is turned a in that's result generally in growth you pricing quarter currency last even competitive number as price, So in year Brazil and chasing we are third same have around of and currencies

We've think that the opportunity. right emerging find. the X% I'd But X% year, say, as is long-term still been go this has we So tough to growth got good certainly growth to develop. markets

Ali Dibadj

it -- all point? into this X% Or in at like And they range, a do going to reach Because get you to just just it near certainly even XXXX that? I those doesn't no to the better drivers, next anywhere are about if X% you X%, feels mean year. visibility that, think on have it's far pretty get the

Thomas Falk

January, give the babies aren't it say it to don't aren't not that We you in -- this year diaper instinct planning either. mean your snap back. I'd right, again, we'll Yes, is be -- guidance but I next category expect for -- we're in year would going 'XX we that born to the

year in all a as from what So to is thing, later. there standpoint it forward going it's and on what looking else be again, how think, the I planning at a Is are expect little those kids affecting they're I that that going challenging it? would recover? least stage. at. path we'll as Korea that's -- we we're in might for But where this having At be be to a much is XXXX. of understand, What's growth things another millennial Those

Ali Dibadj

then if And the I question. last just may, just

private-label on Costco? seeing label we're stance on Amazon. what's manufacturing your for retailers example, what other Given trends, than private For

Thomas Falk

don't private Yes, long we and across small and of long, it do very is talk X% sales. have categories number of much, our our a retailers We about for of overall it part than very usually label do, business. several It's a a and for time. less

Ali Dibadj

channel e-commerce private to in label? nothing the in particular about And regards

Thomas Falk

in label we No. think -- private isn't I I I mean, today. there e-commerce mean, well, much

are categories in key where is and on Korea, and e-comm branded especially, focusing the around it our of it's markets is And and China lot where place. across a so category building exploded. we taking really business our the many And world,

Operator

with Our next Research. Nicholson Wendy from comes question Citi

Wendy Nicholson

your about your discretionary to been? cutting that on you profit spending, have on comment have it's maybe If much focus your positive could cutting you your insulated your right as assume costs your your cut some guess, and difficult given and decision aggressively when more I if the organic spending sort in on hand, talk a cut? of that are how there's you I would environment. mean, great impact how one you spent hey, to fat are talk as you the is And negative could think sort leverage going operating But challenging margins up. you've more, obviously your you less markets do that, address now. there top philosophy, growth? I of you so on thought line -- just about many Can a

Thomas Falk

the of get up of gross because shows a little see in of digital don't advertising some let reduction as and give in that bit it calculation give give you has is headlines you change first kind net you a and I shift sales to me of couple a sales. I price the there and coupon our of all, of value Let out analysis the more sales Maria couponing digital guys mean, detail. you we been mean,

of negative point digital and spent part that price bit So little coupons, a is less more advertising. of X we

other little but you've give more competitive tough cost you stimulate more and so The a and share you I about detail it like it. the Maria think, in play more probably category little felt is, a a normal in this influence kind in Korea, demand. we've let birthrates could you there. also is we if mean, But markets the bit And of being even you the low -- like advertising got that important, said be help to a belt-tightening sharp then on you thought on bit lines of kind necessarily U.S. cutting price do invested going environment, could that. really how I between year, isn't a I'll more we've

Maria Henry

the follow comments that a Tom's investments. that monitor pay just what lot growth-oriented those on And I continually ROI attention Yes, to of investments is to make, we're where we to expecting? on highest environment ROI the the we we we on see, best the are given getting dollars then and dynamics. category shift we the use, And strongest competitive what is, and our investment the that

inflationary sense spending, always top we when expenditures. overhead belt And that room is tighten discretionary line is as items. And the our where face On pressures, and while area is you on on the it it makes where to have discretionary an just lower-value to that, rank and eliminate the And and order we there's of we hope that of return pull all lower our higher-value activities value, and overall a just spending contributes have back the success a profitability areas company. again, activities. the of

ROIs below And line look so the the on and it's at a regular belt-tightening investments. hard growth-oriented really

Wendy Nicholson

it. Got

where market diaper in trying Okay. on second share And is lot Are renewed I is you you how from threat investing to there. if I'm the end? your in you portfolio? are maybe in a positioned, can, assess big specifically. that about their remind much pants the focus area? on a business then their Because of is Procter superpremium the your How they're how Friday we in your heard Can my China. category, just initiatives much on us exactly question, just

Michael Hsu

Yes, balanced, but premium -- of the Wendy, probably growing but we're it's balanced been our part overall. Yes, business we're we're probably the generally has business, Mike.

business. good we're have also of our of Tier Tier has side and where X. position driving out We and in business, but a our And been X that's of more more the the X, premium growth

even with like diaper got in to overall our versus we're world's technology great and versus Tom the performance there a our think there. organic Our But in I position -- China very obviously long mentioned, year-ago. market. great we this similar It's confident as team We've term. the quarter, largest business was or

Operator

Sachs. comes Jason Our with English Goldman from question next

Jason English

cost. costs to guys, for should shaping Tom. is come what some pretty is back. enduring you sort headwinds. you. a results be as pressure think U.S. it's year out do be the point, combination I'm What what against obviously I But really tough they parse in trying I flows, the to mean, this flowing pricing of and stands out, may of birthrates like, and what have around, and ebbs right some conceded, head and up more Input at is transitory you've my may in Clearly, wrap now, look

to And around I poised model where negative environment cost data, asked you XXXX so markets, back price. you're We think question the momentum to deliver I've with or got my to find Ali year private the driving label. negative competitive price just take were some to in intensity a many an inflation. it's got flagging on see and

my that. question it not, are margin profile the that enduring? the So core if more business for of is, be should is Why believe we not? pressure here to overall? And implications why pricing if And won't that your what Is stay?

Thomas Falk

good, So say I'd one thing. deep there. philosophical questions

at this really, include the somewhat the As we in you couple label bit private point, e-commerce label that the category, in because in overstated private it really probably in doesn't markets in saw label relief-related. is little And the look of growing Nielsen quarter parts places, particularly hurricane particularly the data, particular, spike of at probably private there's were where of a very a U.S. little

the going So do diapers, have going see how if But But would you've resolves to question, quarter yes, products be diapers private-label we forward. as price-competitive both winning you've larger that view your we'll a to you're at to and got of to go forward. say may you got rolls that, buy it. donate

don't that's to I going change. so think And

competition a although time, that market. annual competitive probably a expecting going that's increase are going And an you're good lots make long price every for -- so to not global as of long, we local are price year, we operated we well know but way that the get prices as to competition haven't

want to Mike, if know, you that. anything to add don't I So there's

Michael Hsu

make, pricing the observation seeing with what isn't the Jason, it the that inflation, think of is cost pressure normally markets I no, an though, No, in some you see. you interesting

I preparing able profitably grow so But obviously, environment to that again, be we're ourselves in kind that to And that's think effectively our and preference. a marketplace. not in operate of

Thomas Falk

Some you it have predicted quite as supply/demand look would price is. of wouldn't if pulp honestly, increase, as at really you model, the high be it

if our and sure -- that say it's hard is in RISI be going to stated believe It's be the 'XX. yet that you're increase under forecast to enduring. you going real to to supply another there. price And off fundamentals, again it's that So not demand and higher the commodity that harder it's

Operator

from comes next from Grundy Kevin Jefferies. Our question

Kevin Grundy

talked Tom Mike. come little bit the came wanted and which the broadly for than personal into surprises understand you question in year-over-year the the just and to First also going were downside. Because, comparisons I I were to America North in I of Korea, sort quarter, a which think, back expectations, understood. care, think understood about in shorter and to what Tom, birthrates already South quarter,

that just And some So that. competitive even next was worse drove if a that to like follow-up. in expectations the the it then does just to And so, have than that try necessarily better get into I'd of was why I environment better or understand downside? year? QX

Michael Hsu

Yes.

think for particularly we than -- while, and the North probably largely South Obviously, in I I think, active U.S. continues I But I larger what -- a we America. previously. known it expecting in there, environments where Kevin think think the probably been the out be competitive competitive has that were to particularly Korea, birthrate, environment.

particularly is the are in the expecting and you I from as our We've going are we we U.S. a promotion that think America, our perspective. fine-tuned North finish performance see out what see to year plans. promotional improve, to

that are now, reflection better expecting seeing we're I performance at think of some the and we there. shelf

Kevin Grundy

topical to Can And may, probably is say of input would is pulp question are first which group Okay. across and -- if around of becoming purchases raw around and this certainly you in that company and Maria, of margins on activity? then confirm cost pulp more cost the given worry competitive worries the XX% a pricing inflation, the Kimberly-Clark. for ability over related Can broadly kind just you goods with the inflation, FORCE seem there for here just applicable sold? for housekeeping. expectation inflation just so I I about commentary would you, would helpful. less material your the environment current potential months, So be XX next savings line, offset that, company's top the to what's the given for certainly given the the

Maria Henry

Sure.

what is for largest spend spend under we is goods of say commodities- our is In which within XX% the our that, That terms is of company. buy our sold. you of and generally, to about And our energy-related that that, X/X commodity just number. cost then about get will commodity pulp, pulp of purchases, single

pressures expand the talking stronger FORCE as our million it we'll is of we quarter. goods done sold they have third cost in lens our our drivers of We're to last that that cycle, it There against X.X% year-on-year In And constraints productivity inflationary about fortunate work supply The has we through savings to been million the see, for saw overhead performance that some that years. in on inflation been a on you the look quarter. that of very demand of supply FORCE chain. the to on savings. is the to delivery. have the as were I in terms to great cost now about look to teams We're the savings of teams more have are continue savings drive the inflation $XXX at up in $XXX delivering at cost at where inflation we And we strong of to continue of cost of couple of in is Tom the getting the think so be play When expecting. it seem one even that be as than we've high is. and commented, wouldn't here, we expect in higher The the that. aggressive fundamentals job

to the you numbers In commodities ask terms Paul we on where to and of exact think the kind expectations going, are through. going of run I'm

Paul Alexander

January. or for said, XXXX assumptions Tom that planning think detail -- give months Yes, you the we'll get we specifically, next XX when I I to in as our mean, for

suggest he now, if As next at market would looked referenced, forecasts also year. you again they inflation right

Maria Henry

a think are to some at And -- some It's get will we band, when point it expect we enough, against some you've if it. in pricing -- point, at commodity be about gets able inflation high got just if when you that volatility inflation where tougher of it, in historically, a and in we terms look point the to around the if are get you to you usually it's some the inflation, some little on But after inflection market. price we're able price.

Kevin Grundy

Thanks for that.

down put Just guys asking without it. to drill you to numbers on

and cover fair prices the at For savings spot can inflation it to where is months? you your that you over say know what feel input on Maria XX that next cost the this point, FORCE Paul, based and are, comfortable

Maria Henry

again, don't on to want give the outlook. Well specific a I number

we're we FORCE deliver gave good for I savings, a cost in we basis. guidance to when you year-to-date that in think look this shape our year where the at are

to we that as forward. we've we believe continue program on go think room got broadly, looked to I

give we when in will what you on the versus we estimate. perspective our on cost January, So savings come the inflation we back think

Operator

with Our comes Lauren next Lieberman from question Barclays.

Lauren Lieberman

of couple a questions. So

was thing China. just First on

that could may said China be just was mistake, something down guys before. you -- you I hearing quarter. in recall think but I -- that or it's not Would this my diapers it volume

forward? the on the and dynamics negative with of negative of the But volumes was strong just turning pattern China business little the then better. outlook bit, sort said you My and first been volume talk has sort that diaper think pricing, can a question, pricing in I you

Michael Hsu

particularly Yes, Lauren, in down volume China, was in diapers.

pretty year. of mix probably pricing kind has the think of much And what was and beginning favorable. the it I at environment on QX annual stabilized of assumption versus the our

a our chasing Chinese the about in We world's been on little from more competition X Tier probably, recent market. going little a or business, pickup our been the has I is probably business. mid-tier think players. what's our the probably more lost bit business, versus premium volume, largest different local is a what's And little maybe quarters volume

been -- local out hasn't business P&G recognize but say is picking our would competitive up this much players we there, at by our some probably trial. it's launch that I So as point, affected more

Thomas Falk

part volume so at of quarter was China against our the looking comp Still, toughest third year it -- in of last the year.

up it's number. a pretty against growth So strong

And pretty of grew but off, there. strong in China we're slack so little bit femcare with competitive quarter. double up digits picked And the that It's we've happy our a progress challenging kind making going we're has on. taken a got overall, and yes, and this set, what business

Lauren Lieberman

Okay. It the Brazil, like of couple sounds seems many that case been maybe It was in markets. has also path femcare a accelerating like an markets. in

competitive know the can but talk that you as markets, I look bigger category, opportunities femcare and you more diaper just of much is diapers D about, a and to So and role play, in kind E degree you to environment? growth about expect forward continually balance, think the which can also perhaps,

Michael Hsu

net business. Globally, femcare us very consumption Overall a I both our I was digits. and/or In story a strongly, in distribution. said. a up in improvements offering. even. significant product pack by though. presents opportunity right think better offset when double in excited selling is up to Brazil shoots. Yes, mid-single for consumer Maybe much I organic [indiscernible]. think in was some to place, femcare about the it strong think to femcare Brazil. Year-on-year, kind Volume's I prices. we're demand price think And team the poised were confidence are as specifically, we're I expand Lauren, in sales diapers economic decline Brazil the in do We've But we're up seeing think do got in -- tick really the hasn't touch, category a overall are yet. architecture our grow a I executing conditions green bit And But a different little up digits, translated digits. double market up Brazil, continues of pretty

Lauren Lieberman

promotional had competitive and final just that and environment. I and one U.S. around the Okay. question, was

that retailers So that maybe something diapers actually are to to hear basket, which where a that being the back do on is Kimberly-Clark talk you particularly their you not in oftentimes, there's of about kind prime promotional you're have degree funding products retailers so list. so rotation?. the get differently promotional required talk up about environment, manufacturers Can higher categories it's stepped- builders, I traffic to using in been that seeing Or it strategies, in that? they're

Michael Hsu

Yes, true. I are these Which are and so But hey, think it's statements those we are the retailers is, of I that maybe though, seeing see would that I invest some And I them. we're other out a say categories that you lot can Lauren, competitive think is perhaps high-traffic-building it a also lot maybe, behind there. numbers it of true spending. think believe in partially

think I bit a both. it's little of so And

As July, performance We with first U.S. I have promotional in in happy said our personal to weren't maybe we did approach. the fine-tune our half

think the over X% which about up volume X%. as particularly steps, has team up made Tom organically I and was family was mentioned, care, in

So we're progress personal And I care very improving we're that, the expecting on their made in-store to they've doing good see businesses. same our better And think execution. progress. in

Operator

from Our with Andrea next Teixeira JPMorgan. comes question

Andrea Teixeira

this your be going pricing expect pricing back So to back to you You And as the besides specific in to Chinese diaper and and category, to you forth When smaller competition premium to it's of I So alluded of can destocking want shift reduction what on And CapEx? the on the could on be, the view? -- one balance market, but know you will go you those. reaction is also, you improve elaborate any can to finished increased the for I you more embedded apologize also less pants? And where here. than in categories originally nevertheless, the you comparisons in and it's the expect weak is the be to going would a in. reduction year? you that planned? your of year? into are investing be to elaborate What more it easier the just if tape next you planning the be being on guidance you but you relatively to

Thomas Falk

of question. of I'll China give those Yes, a sure. and Maybe then Mike take the the bulk couple

really first destocking volume call in I So didn't as guess of all, our change. issue out we an

gives second, then inventory know, comment of on want business is deeper on don't and a shift China before CapEx, answer Maria, So lot a chunk channel. through that there's on... our I CapEx Mike good And a I in to mean, you not little of if you e-commerce

Maria Henry

-- come year, the lower the spending our investments, much And the discretionary we CapEx in tightening I is for of on Yes, capital as on and same aren't largest we spending. for capital. guidance it'll that it's And focus growth CapEx, obviously sales have spend growth on about that talked below Sure. as I talked we up on the year. expect with ROI our original about discipline on driver that

discipline lower-growth continue all some to And of lot CapEx CapEx. projects reduces the where recording. spend particularly so are a with that ones created that helping in the that and we equal. ROI our the deliver overall, invest in are projects, been we've And the environment, cost high-return around of the not we along are But savings investing FORCE prioritizing our CapEx

Thomas Falk

in for in China, multiple give more maybe Mike But a what's detail been you And places. her color little give lots we're tiers, that. pants, more a time then on diaper-pants little long in on in there just a of can we've doing on going

Michael Hsu

Andrea. Yes,

question environment your think year. pricing the assumed So consistent largely I is the with the we pricing, of on what at to beginning

So XXXX. pricing pricing QX was slightly versus to pretty but in environment kind negative And for in down of comparable XXXX, it's QX. at was level less this competitive of remains The where we're still in a while. assuming and to kind is it going promotion stay

made cost have on Our a of front. progress, teams the notably lot

years, couple the down last And margins so are well. over gross while the very pricing has our performing come of

And a the there. doing team's job good so very

in the I volume some up some picking trial the volume at primarily around maybe X, more for local issue issue us in competitive mid think competitors, tiers. quarter and was some Tier on the

Thomas Falk

we through your all that? questions, cover Did Andrea,

Andrea Teixeira

Yes.

Operator

from comes Our with next question Herzog Bonnie Wells Fargo.

Bonnie Herzog

category the I guess to a wanted indicators broad bit the and macro I seeing of seem be disconnect a U.S. to rate between in circle to growth We back really U.S. then

as lot you to at suggests. speak theory the strength at environment really, performance doing then driving when, be what think least maybe might So could should consumption category consumer time you a guys consumer? a of better give what staples a the bit U.S. a the be to in than sense And the little soft of us U.S.

Thomas Falk

category a in deeper more unpack and I'll trends of It a go this on adult decent that. mean, want mixed bit is is more. care little Mike, tissue I to let little you're Yes. bag birthrate Mike seeing phenomena. where like maybe diapers a that, things But a and you and

Michael Hsu

there maybe the categories, Yes, are is pertains category a to our things. couple And the -- volume it as of of across down our categories, average X%. all

track tissue, it's with Bath tissue consumer say largely on slightly. down side, the been. where think I'd I So

right? birthrate decline we the diaper about earlier, reduction as mentioned has Tom in been business, the by XXXX, the quarter in a believe, births, in down The of think was driven, which, X%. first I down

there I a of consumption. probably the continues been think the in the under So which if different stress. consumer for maybe driven all has things business, us, diaper read large down read, to do has is phenomenon we a But be some you which our business --

Bonnie Herzog

pipeline, on Okay. And in I just my your to last -- it line your I then relative year-to-date. weakness is question, innovation about top guess, thinking

get to your be and be resonating to your well sense as Just give not some of And sense also year? more how due this if trying market us for full guys a pipeline you possibly could could is will of some innovation in then there pressure as next the a expected? of,

Michael Hsu

Yes.

to I We year, have looking the think on better we're always innovation innovation. in strong do this certainly, do notably some U.S.

in and Depend femcare the improvement. recent performance. with absorbency an our adult X in improvements And in China, Tier in been diaper think improvement quarters, I mainline

we've some even And January. about talk excited But further more good to and think we're to improve come of pretty those in in going those probably We're this year. think back market we're next some I got launches. it I about the So year. looking

Operator

Markets. comes Modi Our next question RBC Nik with from Capital

Sunil Modi

address theme remarks kind I calls, hearing the But Tier a seeing things the guess China if the some cities. world, doing, you what entire there to make you one? are mean, might address is players is X number why about about design players are do question, order in few about emerging And organizational we've and need what you these the changes you're to it? number better been they share? conference mentioned in local Latin you on some over at consumer? in least in of are past and And I America local quarters, how the your two the gaining local all of, different, like, think

Thomas Falk

then in about build Yes, it's X it Tier Xs, category, middle would category, it's Tier say the talk I which I'll in the when performance. the point. of Mike mid-priced A the -- a end, And cities, share the coming you maybe just of of up you easier the and can on pick unlimited middle. makes bit we if in get kind through but low let not mean, e-commerce, I the Not X Tier lot China, on get it. it's a of start the the kind little essentially it shelf. to is trial,

repeat other too local seen it you so much some do phenomena. diaper attention see that markets, decent-enough-performing is. say and what some early get it's that And more to the they probably players of probably where through haven't see trial. can as sell a entrepreneurial and do e-comm, And we in I'd

the in And China like players of I a in players. that a mostly places. lot local are that's emerging would one CMPC you've Latin smaller some say. more this resurgence of where of been say I But happened America has local would got You've seen year,

Michael Hsu

terms all have we're against basics business, sure at about I we're and which make tiers. back to But on to and blinding competing run how our customizing would performing in innovation. And I I any think what And is don't of you it better it. we innovation the competitors Nik. do say I Yes, comes all insight that our tailoring think effectively

well that And investing -- ideas our Huggies think do particularly business, going what on more all invest positioning And to behind so we then positioned to brand we're our I performance is to very think that in our products. and do. brands. working going China. in And build we'll also we have like the our more we markets, And there of is to behind we're strengthen Huggies some

Thomas Falk

is organizationally leaders, we're organized, market competition. the response are own the where the only maybe Yes, we thing to any local local

strategies promote to in front how accountable they're global the do, to line them. to team business, China whatever of day with them. running and the for to a developing help the there But deciding of what or they're deal competition to what every go around to the on what There's So it. front channels is organization kind launch, after

Operator

Bernstein. with Dibadj Ali from comes question next Our

Ali Dibadj

back, Welcome sorry.

Thomas Falk

all here day. We're okay. It's

Ali Dibadj

I. am So

Can broad lots to look, continues of give little us... just based, abstract questions. things. certainly a hearing many concept, So me, an One FORCE, you So two for be us, it's you're is, maybe right? of of bit

Thomas Falk

It's real money. cash, Ali. It's spending

Ali Dibadj

a year you just out, give X I'm X us figure can concrete or it into examples dollars to make something something. but big just -- the just no, project? that Is concrete No, or is this FORCE? turns specific up us I if trying just could you give mean, it that

-- to think about help guys Just it. maybe to think just

Thomas Falk

Absolutely.

Maria Henry

through Sure. we're savings first are negotiating them prices is of if kind Ali. On savings from that the I'll lower -- and with to and one The coming a the get cost able want number then areas, tick material FORCE to, of suppliers. you from go deeper

system, we things manufacturing is in one the waste there, process, manufacturing look across through improve whole eliminating like OEE, it's operations. And particularly waste to methodologies, that. and going second like our the things driving lean The productivity deep our on

The facilities. driving third the area is across down manufacturing our overall spending

and out our So that's it's productivity finally, of to facilities. the of in big product, the equipment the area optimizing driving our products. in spend specifications any machines, unnecessary addition around is the of just fourth cost And the the

performance while sell. for continually to and the are or ways products improving the maintaining we that lower of the the teams the looking product cost engineering quality of our So

system then talked FORCE in that projects area, list made project specific plus you'd personal the areas, they're in then to globally global is across of up deliver care the about in at hundreds looked the delivers what those cost see that make to you place, looking savings. the we've add areas There being find up examples this year logistics, supply savings, we chain last and those team if the And ways progress So savings. of to And all these significant of all year. manufacturing other those products. across optimize it's drive with cost are many, and where they of the share We've of cost where really and cost had one has strong out a facilities our And across system best that that a system. those able locations learnings the helps there to way working our But the to teams across the globally. areas, optimized our been share implement manufacturing with us on of examples projects that four across the in number practices the globe many savings. diaper, of drive we've

Ali Dibadj

a we So in to them, it. just one give to we're dig that's color of more If helpful. to little just very

second the of efficiency. operating and sort one, productivity So

we just average? of So can your now -- OEE, to I'm And are is are how OEEs trying you because on right right? an what much on So where as figure out [indiscernible] example? left,

Thomas Falk

So widely across varies businesses. it

at our high runs OEE machine, So be XX/X. because it's for looked you that would very asset if it a tissue baseload

lots and it and looked be and would much you OEE like a of changes you've grade material got for machine, If changes lower diaper at stops that. because an things

are our a think good worst-performing for the And measure about getting news rate every and in diaper us, the there's for the same And the as machine best-performing machine the machines. between that the worst-performing best-performing pretty machines OEE is, machine. with delta doing, lot system so a good it's still of -- better and we're would at we work I our

see do to lots on best-in-class. get continue productivity to yet of opportunity we so And

Ali Dibadj

of super Okay, question. Totally type separate helpful.

it more You not shares not to market that. a category just expect, broadly, perspective, second there. this put be able better challenged into But things your right looks in ago, now. less from back bit share at guys the you a more What are just mentioning And back but that U.S., showing like results? But but has a mention China, to that little more deliver to I look you market just elsewhere. a go the you get on perspective, be from even reinvestment in just your want China, example categories to share to marketplace clearly the were what are that also challenged. We for are

Thomas Falk

are market country about up least satisfied XX% half. with not that's the in the for in at We're that is our up biggest goal our fair. And we shares category intersections be Yes, the this track, of that to ones. year year. We're

toughest has the half hit, results tracking below that the North America's that been goal. first the given we're had So had. we've one probably

We know, expect a Mike, areas on But more stronger. a from them to I other thinking you want to if but you're don't share little any color finish give market standpoint.

Michael Hsu

clearly No, able It's to run make an business the be to behind not make to that brands, investment Ali. grow at, And great pick that. doing And a I area mean, we happy we're we're that and the it's sure we area trying that about. find sure we're right profitably. the

made progress our grow trying shares, the Not and our at we our think But some the right next because in profit I step family taking time. we're then direction. grow same care. the declaring business grow in to victory just we're

Thomas Falk

year-to-date Yes, but is a if little sequentially, satisfied. we're our not versus at trend our you better three-month shares, shares still our looked

Operator

this At other in the have questioners we queue. time, no

Paul Alexander

Well, we'll thank with right. And you, everyone, short a conclude comment this for Tom. questions All from your morning.

Thomas Falk

everything can good deliver term. do over long value again, to your of Kimberly-Clark. Thanks to appreciate much. we shareholder we'll support once the continue Well, we And very

Operator

Ladies and gentlemen, that concludes today's presentation.

morning. You lines, phone thank may us for disconnect you your and this joining

Kimberly-Clark (KMB) 23 Oct 172017 Q3 Earnings call transcript