KMB - Earnings call transcript Q3 2018 | Kimberly-Clark Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for your patience and holding. We now have your presenters in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you'd like to as an audio question. pleasure today's my presenter, now is to first introduce Mr. It Alexander. Paul

Paul Alexander

and Thank Welcome to morning, our everyone. you, good conference call.

Here you'll Mike, President Officer; effective Tom Officer; CFO. results, with Falk, Chairman quarter our full-year Kimberly-Clark's next focus our elected Maria, will and are us on Hsu has XXXX Chief Today's January three call XXXX. Mike and Maria we'll Q&A. and outlook, X, Hsu, been Operating Chief Henry, our finish third today things, and Tom, this morning's announcement hear This then and morning, Executive and Mike Officer, from that with Chief Executive

of of usual, have site. As in the today's our a Web Investor section presentation we materials

see on Factors Annual the our latest reminder, XX-K forward-looking Form of Risk forward-looking a As will Please be section Report we further making statements. discussion for of morning. statements this

results be and measures. That described earnings this referring morning's to we'll information Finally, these outlook; further adjusted items certain GAAP both financial in to comparable has about release. exclude news and release reconciliations adjustments

I'll Tom. to the turn call Now, over

Tom Falk

Kimberly-Clark. like Paul, congratulate become be morning of good Executive everyone. to and to Hsu I'd move Officer on the Mike first his Thanks, upcoming Chief to

been So my time. years, of and congratulations, now working right the is and for is that Directors Mike. the plan on Mike and I The succession recommendation have this was Board several it right choice

the right what for our a build and is marketplace. while people win our a and caring I'm delivering our about deep it of businesses, to planned natural brands in to he world Mike is leader performance. carefully the around and is this He has takes passionate the Kimberly-Clark's top-tier And legacy understanding needs So nearly of transition. people, on the of XXX-year confident

Now, hand to the call let Mike. me over

Mike Hsu

everyone. morning, Good

into to you the thank one your tremendous like KC for your really CEO. XX you, XX tenure, especially years last of world's products leading years, Kimberly-Clark And consumer the during transformed over Tom, companies. past of First, the as leadership I'd

to lead about also mentor You've a company, excited great been great future. this and I'm and honored I'm to me, our

to going call back the to over third results. now, So at turn hand, talk to about to quarter the business the Maria I'm

Maria Henry

Tom since joined great Tom, congratulations, in looking your XXXX, Mike, and I Mike. the forward future. and mentorship both and leadership Well, Okay. to

to So, commodity let's as adjusted continue we we increased the awkward negative get currency lower per it savings partially Helping to Margins to headwinds, Organic to were of taxes, quarter, inflation cash pivot headlines developing sales spending. return emerging markets. the as cost profit offset earnings delivered were overheard and so in shareholders. those effects. And X%. is, it. the driven X% going share into and I'm up X% with foreign operating by significant for strong growth reduced our and impacted by and to benefit And finally,

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

X%, while Our ago. $X.X versus one that's from mix prices each Organic Net volumes third drag year-on-year three-point X% fell quarter selling and X% improved net were increased sales with a rates. a billion, down currency product year point. sales

was adjusted on profitability, XX.X%, gross quarter third basis margin Moving year-on-year. XXX to points down

previous to operating in Commodities of the full-year points. our the other million down materials. drag basis $XXX commodity $XXX now Third quarter pulp a that primarily of million million. was estimate inflation expecting adjusted upper-half margin to were quarter, $XXX be of XXX in raw due XX.X%, We're and will

rate. by a also quarter, were high operating currencies reducing single-digit the a in Foreign headwind sizable profit

achieved savings, material we other FORCE million benefits significant the of On including hand, contracts. from raw negotiated $XXX cost short-term

from restructuring our $XX We million also savings delivered of cost program.

overall, small Latin America in including making this program, that consumer tissue of good terms quarter. facility we're progress converting a closing In

declined reduce as XXX our to sales. was we addition a restructuring, of All X%. between-the-line in percentage continue to profit adjusted spending basis all, down the costs. operating points total, also In overhead net In

were adjusted lower which tax be bottom be interest the between rate ago, tax count. is XX% per better We XX% the than year. because that tax months lower to this and some quarter share earnings X% our with our expected from included third target line, XX%, now initiatives. share largely up $X.XX, year-on-year. That expect is I'm pleased three from of estimate of along benefit planning rate, will full-year On significant rate to effective a below

initially we're this significant back tax somewhere XXXX. Therefore, will for year-on-year our expect rate point, XX% headwind the will range rate XXXX into I up be targeted we in at ahead earnings expecting us move XXXX. that Looking for pretty XX% that in the to a

capital let's pension turn included third to to quarter. in the lower and provided U.S. was compared $XXX Cash in taxes. flow benefit contribution, payments, the efficiency. million quarter plan and the year-ago decrease $XXX a million of operations cash by Now, $XXX restructuring The million,

the Dividends in million quarter. and totaled repurchases ways. shareholder-friendly in approximately capital allocate to share continue third We $XXX

We $X.X expect total billion, with $X.X line target. to amount our billion full-year billion in the will $X.X

up organic X%. led Looking Personal sales sales at in segments; by X%. with developing up was our organic and Performance were Care, emerging markets,

down. strong, and the were Personal diapers. In sales volumes terms single-digits, benefited were solid organic organic year, care timing, and promotional e-commerce in both Huggies Personal operating double-digits volume operating were by high-teens mid shipments. Kotex. Consumer improve Overall volume strong volumes, and to North and revenue accelerate, points the growth reflecting outside as of on for Eastern X% competitive Brazil, for fourth highlights America net In prices, quarter, for Care sales the up led our D&E sales for by category, Personal our continue Central to Switching America. from were segment diapers last this That's down a pricing sales Adult Consumer double-digit XXX of diaper lower across up Infant with up to segment Pull-Ups of high-teens, In at mid lower sales in segment, Europe. margins down China, X%, year. X% growth remained driven In commodity to in [ASEAN] Personal realization were single-digits Developed net Huggies offset momentum compared although inflationary-driven primarily sales organic North Overall, prices organic grew Huggies sales sales strong Argentina, growth changes increased growth cost a growth challenging single-digit price Tissue basis while in saving. down tissue of childcare continues Europe, including to decline promotional consecutive to Vietnam. declined increased consumer all in quarter, pants and by and also the a increases and Tissue on organic partially organic of ASEAN segments, Care by promotional led X% our in XX.X%. activity. Elsewhere the be to which in had healthy Asia, and X%. year-on-year. America XX markets XX.X% points, Care volumes X% initiatives lower down margins high-teens Care fell high training basis due last and organic higher were market in and business activity. volumes, Kimberly-Clark grew organic North continued sales mix. strong by represents and [ph], to sales conditions. selling increase in timing realized about sales driven and Western inflation improvement due us X% organic

growth quarter reduced Nonetheless, net currency In prices, and we currencies achieved year organic sales X%. grew higher significant sales Results including by sales were were and Asia-Pacific. volume record this in organic selling I'll to washroom That's delivered summary, in KC performance slightly headwind. environment in ways. and segment, significant savings In North segment commodity spending, full-year Professional inflation. professional cost results Kimberly-Clark market, we Mike to depreciating by KC our grew a to our our products D&E XX.X%. and year. on with impacted continued over X%, allocate driven versus Professional continued outlook. America, Organic margins points continue volume commodity turn last comment down by that, in growth up to it in adding Lastly were basis wipers. third were overhead operating XXX With difficult shareholder-friendly impacted capital back

Mike Hsu

Okay. Thanks, Maria.

of aggressively strategies At up and the continue to same execute the we our deliver P&L. remains inflation especially As volatility, commodity near-term, sustainable growth. in overall the challenging, you to know, managing and currency long-term our down the time, we business by responding most while environment the are

our As we mentioned outlook for release, line confirming key in our previous financial top this bottom and are we morning's news targets.

effect in we year. those announced in And of America. encouraged the in be On our that months. quarter July of sales the XXXX. equal and commodity be up half back-half XXXX. the currency top went to consumer positive foreign organic growth first and price the when on with rates mid-August, Realizing headwinds given should what higher being next in again the Pricing indicated selling consistent prices. third down increases are in pretty I will the X% from start business Many increases imply pricing forecast through North we majority important go will quarter, into to prices we making nine said target in in of X% that first of line, that continue that's recent net we modestly of progress year selling That's we am actual X%. approximately the in significant performance improving our to to

XX% by currencies, will negatively than assumed we range foreign slightly Latin XXXX, these in recent operating That's commodities because looking to factors currencies Now, in adjusted and mostly for at of especially we many XX% in expect profit weakness our the America. more July. the impact

as and addition, raising commodity inflation reducing In higher further bit our selling average, result a is outlook are and teams so, prices. cost on our a

to in continue bottom outlook Maria as year-on-year. XXX per XXX tax improved. to we of to rate addition, has share In for up earnings adjusted X% All X% this the line target for mentioned, our That's year's year. all,

up So following. let wrap with me the

who world the committed am proud the KC lead vision to committed I who better to XX,XXX First, the our vision the world lead a world in in life. to are around extremely to are employees for our essentials of

senior lead place strong forward. have to this company help We in a team leadership

challenging, optimistic our brands teams opportunities the value. winning third, around to current in And our and Second, creating the is while the have our environment focused the business, long-term I'm on are about grow world. long-term improving we shareholder marketplace,

prepared your take happy to remarks. And that be our we'll So, now, questions. concludes

Operator

first Bank question at Ladies Tong you. from for Thank is and America comes Olivia Instructions] open with [Operator Our time, Merrill of your this Lynch. the questions. gentlemen, floor

Olivia Tong

morning. Thanks. Good

and Tom. First, congrats Mike, congrats

Tom Falk

Thank you.

Mike Hsu

you. Thank

Olivia Tong

particularly Personal Care, Wanted still less was but to in progress the about price America North negative so. you in ask on obviously QX,

express price the So into as hold, we your swing And still to macro as but or see markets, positive QX, to that of planned realization? you is take swung still developing could that markets? that can across nice it also given of some plans are challenges the price more promotions there emerging it's then if and much should positive, that several we cost-justified go it expect even in key the how

Mike Hsu

part. Yes, Maria, maybe on I'll first comment the

think have the us Europe, on we Latin all is generally probably well increases we've I I expect mean, try progress in the that North now, think make does I price the also recognize I the market right direction. the we're headlines to consumers. Argentinean think the double-digits category we going America, At retail think actions, think our you'd mean, for globally stressed, generally consumer we diaper are a say and you're almost we're in generally is North pretty move America, need raising in currency increased and With year-on-year and progress, And on, is America of the track increased minimize the to and to agreement optimistic regard commodity overall we the discussions on the that probably mid potential optimistic in of had this increase would will pricing year, of the that that. North the wages D&E, that highly to have, well, diaper double-digit. challenge. impacts their and I about Latin to we've quarter impact we're is wide America. have prices about overall a I offset we're range we're but in I both and prices significant high while But in on to XXX% price America, and market single-digit to forward the moving is cautiously and that that the move especially and will it brands cautiously making, disruptive aware, upward. I taken -- right Europe, impacts. one

So doing to we it's we need what a this are challenge, to do but business. manage

Olivia Tong

it… Got

Mike Hsu

Olivia. Thanks,

Tom Falk

ahead, Go Olivia.

Olivia Tong

thank Oh, you.

think about So, launch in on touch volume decline price? about down mentioned the last think cycle part mile market didn't things timing trajectory because quarter a some so Was that you the And there, you this that I that, assume indicate the rather to using coming. the any is just are innovation is with there I shift particularly addition long-term opportunity to recent than the China, what Are change in still you and in on of you you doing stand? also you you're had change to concerned the markers conferences. now in talk are but a all China where of sort what

Mike Hsu

I'm to in it's it's complex performance we're long-term -- biggest opportunity, got Yes, China. our its obviously our but challenges. trying also now It satisfied with remains market not a right and

And we've would about want we enhancements pull. all team them the that to made line, product with product. is excited in are improving starts think I pulling on the right And that did the and -- the levers on the market price marketplace, but commoditizing. be pricing in China out that down that QX, in of that going don't really the competitive we believe but said, middle is to in come you believe we're I

the challenge to We have competitive. pricing pulled going But high are quality. while a going it's down, interested has a Volume big I we're and products That product challenge. to pricing. market. in It's and still to new it near-term, year-to-date been the seeing long-term single of do for for need be ongoing the said, number view growth in be digits, a up been the as has manufacturers so a consumers but

Olivia Tong

Got it, you. thank

Operator

you. Thank

Jason Sachs. Goldman English from with Our comes next question

Jason English

a morning, levers good to of cost. again the minimize discretionary left and Hsu a you couple in spend you line, of on once guys years, bottom pulled for release. Do discretionary believe in vulnerable? lot faced Thank the Michael, question. a reductions has headwinds lot of pain spend highlighted both in of have your you the sort lot at folks. Hey, as including last clearly you the and competitively your And of competition reductions have you've in

Mike Hsu

One, no. I think simple Jason, is answer, the

are I we global a teams the this a doing cost. beginning getting had great think We we're is restructuring year doing big proceeding a job that the announced that of efficient very, well. at -- in very more very

are the and in programs, a identifying that better, drivers innovation, our us this spending still are spending us and growth areas, good the feel year of areas. critical product improve efficiently, we and had opportunities us, think are we I Maria, we're lot we right going we're also that But managing efficiency. in for however, invested to for opportunities But right to and execution spend like any additional… marketing we identified for but weren't where we're sales we

Maria Henry

also types in activities taking Mike. And we're you administrative Yes, on has types But those had certainly reducing non-working cost the that's I pulling general done. We've paid this need the costs, and the if that we really at amount get biggest travel, us things, big headline, really done think consulting, of where out it's for a look off and year. to discretionary in the of of advertising on differently activities. get like what back to working order focus

the So the program restructuring the that of we're to that base drive will and cost structurally leveraging of portion be company, sustainable. down

Mike Hsu

Yes.

big our I'll markets especially most note think think and better our in improving, in-market getting America Consumer of in big Tissue. overall, I are North diapers is businesses and Jason, I in think I geographies parts I is performance Consumer think in further, in

having that in performance in markets. China our with their being D&E notable good think I markets, one, one are of a many exception,

investing in So right places. I are the think we

Jason English

you. Very helpful, thank

Tom Falk

Jason. Thanks,

Mike Hsu

Jason. Thanks,

Operator

from Dibadj Ali Our with next comes Bernstein. question

Ali Dibadj

were this to and guess that's disappointment see from happen. still has the worsened Tissues, the I like, going we'd Mike Congrats Consumer lot and behind like your of for we're given margin is to looks a a Pricing it's bit comp it believe a questions with coming EBIT -- what pulp. on guys. even few clearly it's looking on that looks now the we guidance A Tom. here. bit startups little by pricing you it expected. little surprised pressure and little continued And like me, going Hey, But first, FORCE like got and so to pressure looks looks is a

So, all margins expect trajectory over about the talk given can look bit few those you moving the your you like little a quarters to next parts.

Mike Hsu

I Yes, go up quarters. trajectory next mean the few will in the

points net not I think prices announced at quarter that of the that yet. mid-August. which was the has some North desheet have has more That And We taken challenge Consumer did our related and this America, innovation the beginning been year. up progress. we of Tissue most pricing we the obviously of in in couple was of good selling to in root the a made

So generally got North first high Personal take then but see single in XXXX. we've mid significant America, includes and headwinds as in and Care quarter huge we've of made digits to we'll progress, the in have markets generally there, to well. through, we coming price America, that more Europe. start increases And got in that developing and Latin particularly emerging And currency in place

Maria Henry

describe momentum savings expected but look Yes, the we in quarter, expecting then that the weren't where the I transactional the behind On currencies some but the in. was a Latin it it not particularly relatively U.S. one $XXX quarter, was and lost that's we a somewhat of on and as from that have in a was number, double the up KCP significant drag XX% pulp. that buying In if big with there the lower on coming in at raw And plant cost the only say translational countries savings, cost I'd year-on-year, We And I inflation. breakdown had expectation. FORCE region that currency. was other you worse of segment materials, those than had gave we FORCE effect, currency that stable solid And on we third some XXX, it and is business. pulp they're within million, outages we values our our America, for we in our for if what comment polymer quarter. the Ali, the business, side, so cost in the other what quarter, the in dollar-denominated on hit

the in currency for the a was transactional So us negative meaningful quarter.

Mike Hsu

if you breakdown the interesting think savings hit currency and offset look the note, a Yes, I that that unexpected results, there. pricing It in cost is up generally side soft which the add quarter at little left and that commodities. probably was

Ali Dibadj

So, just looks in kind question. was another and just One personally margins. -- that is look, to little to like follow-up Consumer on your point, stabilized. of pressure business, is, on Tissue number specifically pulp a the one, bit, That's domestic

So call of understanding we're America then pricing, there. to doing X% better Argentina. our just that, sales, Argentina, XX% inflation, price of math it And mean on right, your from XX% came I to actually the so pricing right, if Latin X% your bulk

So given KMB? you as want your you time forward you, the on for those a these all that you there Mike, Are pieces as look think look forward then question, and you for there. for to of vision just more And spend the are business follow-ups broader moving challenges. parts

Mike Hsu

come to Argentina. Yes, back let address I'll -- me the

I most notably price in increases Latin America fairly many and we've in Brazil. think also markets, taken broad

tissue. clear And wasn't than more I So question then your Argentina. North America just about it's about consumer Ali,

Ali Dibadj

consumer quarter. North business. just pressure saying had operating where this in America I'm really kind you of that's tissue disproportionately your were margins so And Well, some

it's by going not pricing. in So forward taking America, going the pricing you're resolved international be to North

as guess to margin Consumer operating here I go So was in understand the I'm well. particular trying forward you Tissue of trajectory the

Mike Hsu

in They've we'll therefore about America initial a the it's we a big starting say, in which would it. and that a impact. did and obviously think Tissue not Yes, see obviously start job offset good hit that's -- team impact trying it. commodity to is and quarter, the the But in of why January. price half from I August, of lot move Consumer to done nice has North I And pretty a offset, enough,

Tom Falk

come that sequentially by Mike couple that's XX And pricing, said that were yet. what Ali, we expecting were of up a points, just given margins that I the times, so business and market line as basis to in would hasn't add in in the with has

Mike Hsu

quarter, strong, where the Yes. thoughts. of now to of strategic maybe a which I'll so job focus we 'XX couple focused and kind And you then is. that's with give on regard I'm direction, to got third still Right the is I'm your in, finish

strategic more just you have then. We of share I'll occurs, as couple transition talk will But things. this a plenty a to direction opportunity of I'll thoughts, so few give

you focus brand the to operate to And our CPG to which business, company going execution, really not innovation, that long-term of shareholder-friendly core to on continue to of tenants, continue Ali, business going would on those what one, is, going what's shareholders. the forward, manages. or value. we're shareholder in perspective to a kind And change cost balance the the are areas going Here's focus a with we're every on on expect, so savings. manage it's way We're four going the and building, as I kind mean, in-market drives

how think assemble kind I it's them. of you

a working those to categories, I premiumize make and more but emphasis inherently the think big I got those when will actual I and markets. for. they're those that categories is have couple tell where of categories have you businesses growing, slower think -- so we've is, about And big been you on. that the where performance and our maybe we big And we've categories developed is thing we've differences, in we thought-starters talk strategic paying opportunity in great got performance One And matters. a worth we really elevate have

the core opportunity for So is our us. business key elevate

markets need market to D&E opportunity driving the and our the our development Care over across weight us. also lead emerging of market think business I do multi-billion-dollar better job big we in And obviously is continue time. for portfolio, potential. the other The world lead how to It's important driving opportunity across Personal developing long markets. that in and the can a We we a a

digital area front. is third the and The ecommerce big on

it think impact I business. our can transformative have on a

business to they're it, duration using our the and retailers and ring they're the categories, spending our I really earn think our our consumers the because in frequency matters they long our of categories.

on our really we digital going business and so transform And to through look ecommerce. focus to how we're

So those are know couple your I a of thought-starters. answers don't question. if that

Ali Dibadj

to It helps. forward And more look it. again. about Congrats chatting

Tom Falk

Thanks, Ali.

Operator

Thank you.

Bonnie Our next comes Fargo. question from Wells with Herzog

Bonnie Herzog

I guess I on the the to expectations both Thank you about fourth sequentially your or you. sales congrats maybe full-year Good organic won't that and I'm quarter X% imply question worse quarter. context morning, thinking your Tom have a expectations, in and better to internally. wondering Mike. performance this X% organic in for accelerate meet growth was I'm sales of guidance. growth this your your than your if which

I'm mentioned. guess why pricing guys how the this you've you impact is I are So wondering the and some thinking of actions about of

Mike Hsu

about little kind us. up to on year-to-date for We're overall, that is track the thing I X%. mean, be we're I on important a the mentioned I expecting And of earlier. think, about Bonnie, for what full-year path.

seeing including of improved categories, In America We many we good are D&E North up on organic most seeing key growth. performance lot are share our of of markets in a markets. a and our key and points few in our D&E markets, we're in

Bonnie Herzog

of then label. private had Okay. And questions a on I couple

the pricing. branded and trade-up U.S. label environment And a into second, labels across the the consumer. especially strength macro more followed then First, you hear we're we're I seeing of from was private hearing has on products lot private the curious current not to given from why

relative this encourage brands. could guys this? So your narrowing, how gaps see and trade-up wondering confirm think more to you then you And should price Thanks. the if you

Mike Hsu

trade-up love more would to faster. see I Yes,

I think recent mixed. private label are a little the trends

categories, label If down in up up the a us. was kind three, look our and third was Consumer quarter of for the at two, three you I flat overall in It mixed. more -- think so categories across Tissue in bit in private

our performing in tissue bath Scott particularly improved better. Cottonelle, we both seeing though and business, is of business performance and tissue, our think side, are Kleenex I also Premium XXXX towels parts

I are there and innovation focus on we areas, those particularly product think the bath focused really on for on we us good brought innovation, experience is the year, tissue and it. this really are bringing

we why are there. that's performance improved think I seeing

spending promotion mentioned, lot associated some Maria had America, business. organic shifts decreases we're for The that that particularly our base as Now, to think of overall in was the performance try the improve down making or quarter of A was the and of Consumer bath, to in improving. in North promotional I profitability that we Tissue, five. underlying business with brands, the is

Operator

comes Lauren question Lieberman next Barclays. from Our with

Lauren Lieberman

Good was you. the little thank adult U.S. in incontinence I Great, could morning. you hoping talk a bit category about

advertising the that So awareness, think of when more activity category. raises sort category profile category I raises Procter reentered was the conversation more the of the and the grows

in that it actually mentioned the Nielsen but watching. recently, you is in the data release, trends turned have But negative. be right sales also and really metric So share to wasn't the

bit not fact So it's share terms impacted or share the in in we a on can have the just was if something that quarter be now it's watching, if actually what's you promotional in game the just should or timing talk may not sales about there it, in a going that little indicator particular growth? business, Thanks. in isn't of

Mike Hsu

Yes, promotional fairly where Lauren. performance. America we it. our elevated. and a remains that's activity American for I think to I But the addressing in is, care is soft one that North team improve think category want probably And competitive one it's also us adult area In North the

some We are seeing still there. couponing out aggressive

working us the kind have we're so product we're changes environment is And some that's I operating the also we that the had team well. is opportunities some on of in. correct. think as And negative for improvements Also that, in working distribution to

activity. of there forward I low still or going inherent think years, that a reentered, we're growing mid getting we we are with is growth to it's category a category. into that, is be in and business, category number entrance, driving marketing my call is on into hypothesis double-digits a little and that back competitive P&G category back double-digits more us competitive message, much we're down bit focused I the our So think has to, to the emphasis what category, I'll would growth. more maybe for competing focus the growth sure are little which even for expansion, before make bringing know, a we versus category, slowed new on note that back consumers you going too And driving focus

Lauren Lieberman

Procter, backdrop, activity working in bit helpful. retailers execution, with space as of differently their like, a primary work that's store. in in-store may terms And is a Okay, that and with differently it feels really then display on bit also competitor and to behaving be

can fair store? talk change your share you how losses businesses, are us about maybe still the there feel support you're your you if you've distribution continents, mentioned if be if getting like to on already to perspective you So tell a working with but of in some store, -- retailers activity for get in in sort your needs of in innovation on in

Mike Hsu

I have given -- and our we of globally. are our there, fair tend we a say would in-store enhance as still we I obsessed to share think big feel and That's I a to and performance years we our little the opportunity sales, I for that, in can opportunity performances, for mean, is, with us, getting be still spent opportunity improve. execution Yes, like well, an us improve some

own doing, can with. what pretty And lot pleased of opportunities, so, well, and a and performance, we're going respect see competitors our there. we're of our We be our there's our to can we well, we -- are better, a lot know parts focus we

Lauren Lieberman

great. Thank much. Okay, you so

Operator

you. Thank

comes Mohsenian question from Our Dara with Morgan Stanley. next

Dara Mohsenian

Congrats, morning. Mike. good and Hey, Tom

two I have main So questions.

leadership, been new business your a going that just is of the reinvest recently, terms forward-looking other areas the pressure to version question, to I'd plans theoretically, CEO but business, reinvestment to typical take marketing Mike, or it's any hear opportunity often of the about this in forward chooses some love need share you post in guess I the market in business of support a to First, by more under Jason's there's pricing.

significant, out be forward? implies mentioned planning significant of And rates you as tax expected have of going pretty the also, forward like you or that but those back headwinds. expect So It guidance know just significantly. seems reinvestment few it commodity then investment I rates sort a leaving Mike should and of the way given going you would to Maria comfortable provide of those you cite XXXX? go ago. than today, factors, your for XXXX, are up currency with level forecasts the months we some you're did you the by more recent are look on won't business Could worse headwinds some

round sort you're areas and additional Is offset increases, another going there are also of coming up curious, lot to just cost help Obviously, you pressures? pretty of know, price more get I'm of it years, last the with specific given feels those of there a So forward, possible few outlined? on is next year. for room some for like you've beyond effective could the more programs be the you've pricing? where significant side those been just headwinds It

some of of sort Thanks. I'm wondering the about way. offsets the So other

Mike Hsu

Okay.

could start, a and Maria, I'll too, little we bit maybe but… then Okay, maybe talk

Maria Henry

Yes.

Mike Hsu

think I Manager a is company investment, first there's say probably that in General the investment part on the with not would any and they're overall the happy levels.

so, the some fuel are which put reinvestment, to like CPG, in it, to for I reason and provide for and cases. doing ideas, And what a we average what's yes, a more big why we've that's spend we restructuring, good behind while that's done

core I think which lead our a the digital growth. also business, about across just that what drive three and elevate Personal markets, I of Ali, kind D&E development of you e-commerce Care talked if about the think is our with planks

areas those think that would candidates good for investment. be I are

in of yet, do still some of well fund I that how the we about investment positions and we're details be could and market think how could markets -- leading our do development, there ready international I of build As that's dollars that terms to to spent or so, to we market we that, we think out those after in things. share don't are think innovation, going and come.

I that's So I think one. -- think maybe part

I a are talking one a means that and plan, and do kind I that focus practice of not -- the continue give give couple you and to building, right that's that brand proven kind think long-term efficiency. we're that. holistic -- more We'll now. things, context, tell not on to since to will the you on is, just little we a we going so just going to get XXXX, of are the cost maybe we -- -- are to on building in like how our focusing drivers do and to with asking so January, what regard outlook, we about is stick guidance you're to innovation,

we're So, that. to do going

that has can has that difficult should impact However, more the inflation, over challenge and say fair commodity and it's months. you that with near-term currency three to the see see last or commodity two probably you amplified become

to combined year EPS I for Just about commodity impact on in of reference, the $X P&L. equal currency this the negative and is think

of environment. further unlikely some that of So, terms, pulp our our given like to we is next to commodities be of commodity expect they And and as that this are current contracted the are key currency for probably part headwind be some as year. year, favorable

And we so, with that and that, work through. got to

is pricing a tax going savings to but for us to drag, rate help going the year. cost next are the a Our obviously and be be

those to to are more January, as were guidance we So going back get give a specific thoughts. we but few you

Maria Henry

of know think start couple spirit about thinking make Yes, of I a all Obviously, any in just areas January I transparency don't we when are update the add. are as a think the you together, to will to making couple those on we items and in to that have we of that we you what we are comments are in sure more anything XXXX.

Dara Mohsenian

Okay, thanks.

Mike Hsu

Thanks Dara.

Operator

you. Thank

comes Deutsche with question from Stephen the Powers Bank. next Our

Stephen Powers

as were and your down industry where has thank perspective between with we suppliers ago, a agree and also a and so of if discussion, bit you though Tom, potential any a If retailers, curious I'm if you to Great, you. we Mike, back for it take just a the not step me feels quarters few versus broader as the congrats. for tension as that CPG whole turned terms in outside, to don't customer constructive the be I -- is that's another. ago feels acquisition. operating bottom it fact focus a aggressively line with like of themselves more acting if potentially Amazon why? just today, rooted pure Because so that it somewhat in don't arguably feel the one than a towards dialog when retailers but to from quite seem the more year the was is prioritizing wonder,

healthy guess do argue am to Our are in do sub out, retail, which to to a you other I to up, then for is environment and ago? opened in four relative summary now, turn that cetera. like helped et pricing, I I discounters haven't making has And living three, guess terms? figure you arguably state affairs, are players CPG is over of we the normal trying less that more the aggressive with is which intense the generally a more two, saw just things agree, And broad through extent that yourselves agree window what consumers taken all up spending, the true what well quarters create has some I'd or we Thanks. doing it Walmart feels world, and I'm pursue

Tom Falk

of longer, build that don't Mike -- it this a start little bad category, going them I and sound from I'll know help you they voice since are on I want guess let you, a I that while it while, help you how I pointed are maybe for have execute to -- ever the probably to grow answered would listen but Steve, the going investors to I Mike their thought think would this, their called to say I'll and you my and I've was I haven't as is question strategies. as was, think to how every hear echo retailer

it have are you brands consumers bringing and constructive long those shop bringing to to in that where that innovation conversation Those that pretty usually the up well have And thankfully, front. lousy that or as stores, discussions, as and to retailers working, putting important are service so, your as your challenges going you are with their value a things. most are if of behind innovation conversation, pretty isn't and stack we is you on kinds difficult

to newspapers what's of what's I retailers, happening the they read and most and know business happening think rates. to costs exchange commodity the know

aren't they when so, come in shocked And a when pricing you conversation. you with

Mike, where start the category and their their to -- the to make what get customer though you you you close maybe how about with but and that. a can the are pivot think attention to are you really execution I to build do innovation talking when is bigger going you going in on to store,

Mike Hsu

several is was with over with I years, has year think last different. I of been any definitely don't retailers the tone last I the which Tom, and agree discussion consistent think

probably in what's changes, you I are as relates perceiving part think of bigger as growth infant got it maybe it to us. the and areas, play childcare the a few what in maybe category, improved

in year, year ICC down think last middle X% I in the value. about the of was

was the caused kind that awakening amongst us quite think I of and retailers. and a a rude concern

and we -- of changed consistent last huge last but were year, five has meeting the as this down I has is year, discussions tone, been in latest with year, I before. July you might and a in category discussions what's now up three, tone in perceive the year so think what year the this customers changed swing, And the quarter this think is that probably the

Stephen Powers

flow tax a income to that I thanks Tom tax this XXXX, Maybe one And or -- far for in, cash benefit we great. rate statement you the the that lower -- that's Maria, benefit? it miss is Okay, so one did cash rate, just benefiting on quick, quick is more in could, is cash is that tax if weighing call. just clean-up interpret free and an

Maria Henry

cash No, of it's side on the also house.

we the and in cash quarter. on the and that spent things quarter, the we like in a that third offset we helped So have also cash the held costs bet did benefit operating restructuring had on to taxes lower nice cover

Stephen Powers

Okay, perfect.

normal the as also well? would And more tax cash step-up so, tax more back that a for rate 'XX, to be step-up normal

Maria Henry

right. that's Yes,

Stephen Powers

you thank so okay, Perfect, much.

Maria Henry

Fair.

Operator

you. Thank

next with comes from Wendy Nicholson Citi. Our question

Wendy Nicholson

plough competitive where debated some spending it you feels year, how back let's them given hey, that Hi, or just outsider taxes, on intensified those wondering markets an earnings helping your that I to but the target make is specifically referenced, whether question as taxes follow-up take lower taxes, on competitive has situation activity the are that benefit a you for immediately. the which great, categories internally, from or I'm more this lower you into many and of mean,

almost -- you So just is competitive whatever picture, on product or advertising activity then cetera, et or et markets, promotion you a know, you if in from Mike, look few would this the where sales ago, market new five your hurry X.X% argue it's maybe was cetera. of to ago. forget years bigger important advertising increase business, continents business it is has insulate And at think whether if earnings China, up of range, I sort arguably investment of your categories in and advertising the just or down or it's years it spending shifted to and the whether X% guidance down year, is but spending more shares, our some than

so think cetera, you sales of are markets the cetera? is back X% look to much. five and So competitive these over you think how higher even et up as et given advertising do next forward X.X% do to migrate you years, the intensive you maybe right, Thanks need

Tom Falk

part what year's to shareholder tax figuring value was discrete get et et separate cetera a would activity part, tax $XXX bill create Mike will that the -- we that the guess you extra out in one-time deal, coming as and that of really discussion. of back million the rates I I on let under some pension hold created it. start was to which maybe benefit come new a the then rate options is Wendy, a deduct have tax putting tax clearly I to cetera, plan, last whole and Okay, that the discussion,

or the innovation less more look mean, right the plan market. the business, right we're the behind you investment behind in investing I As at on

that reinvested category activities. track, say right and as up of media generally We're restructuring, significant would promotion at of we're savings and I intersections a that's been lot like I feel show of the let's we and non-working amount the XXs a mean levels. I in think generating investing advertising high about up of country So we're part also in share,

Mike miss which focused may think that, increases that. in I'll think but I times on, team on back-half thing to still so, the price where driving you other let And be the is pivoted that's build There some we be I on right but opportunities, focused need. are the and to

Mike Hsu

I it at yes, these overall like you number, days the said, because goes number advertising That get Wendy, of our too would lot to Yes, into can't a read much spending. into that lines.

example, be for digital an slotted example, expense. advertising may it And more so, things online spend -- even can for sometimes like going on, the there is which two into though feel promotion

lot differences there. of So, going there's a on

our The are in improving other thing is media, digital given that's all a significantly. ROIs occurring the innovation

so a in And day. impact every for ours the consumers And are think big based long I that businesses category or we're excited about has time really are that. continuity that a like for that more

areas about markets excited And pretty to I so But elevating that. digital, D&E earlier get the more. spend you yes, think like core, I would to if us overall, around and the about had that mentioned I'm

Tom Falk

above to if was average I by not will amount. you this, I advertising the better, the any in this we our spend full-year quarter, a feel Wendy, are but don't are know small disclosing think -- going not make we

the spending we're at even So in right levels this quarter.

Wendy Nicholson

pleasure congratulations It better. does thank and feel on been Tom, me retirement. you, knowing your make you, And a it's

Tom Falk

Thanks, Wendy.

Operator

Thank you.

Our next question Jefferies. comes with from Kevin Grundy

Kevin Grundy

to I'm every recent for which one one in in a updated satisfying sure of for these of you, at you're some you and with here, a which its Nielsen touched well. Mike, Kimberly-Clark U.S. have trends, just we as we bit sure four-week your some margin as given look and we've degradation is issues I'm most thoughts mean, morning, was share the to good on which major seeing data, I particularly guys broadly throughout market Tom market objectives categories, in of can't disappointed, everyone, Thanks, and that point losing single the here the little lot congratulations, I data of these Mike be period, pricing one -- get the hoping balancing call, you. are question the share

also can some lost Are was earlier. So up brought that. market share, how is discussion share, touches this around talk confidence issue market which improve of willing near-term. particularly in on tissue sacrifice some and towels in we'll little broadly worrisome restore about to profitability It this of market then losses and important how label, maybe level just this your the of to you and bit to a share, you and private here is an near-term a lost these see

all for that. thanks So

Mike Hsu

the to fundamentally way which Kevin, the and and that can foundational exist go market me is proposition in strong long-term. principle, and win Yes. we're focused over consumers share we over what does a that's the let that. like with deliver And with to on, you that's the believe along I our only like, long-term start

the North think of different. I I lot slightly our is that a in think given America data probably in quarter

I There's also And have even categories. online. us up so in a of channel in of or in activity eight five club lot out going and on the

in care. so were So share performance is and diapers Latin or up Brazil in In I what was points feminine including think, across that's in three point Argentina, a I two both and two I we're broadly point one. America, And or a in care. or in markets up improving we up points up and many feminine then saying diapers three our D&E. think Russia, I earlier, think In

market driving on And value need the we activity. need that of the seeing proposition focused are to we share. guides recognize So to we a and focus very to and lot we on right improved have pricing which drive you are performance

Kevin Grundy

you. Thank

Mike Hsu

Thanks, Kevin.

Operator

you. Thank

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

Steve Garmaise

last this in positioning echo what of for also further versus could building to to had place then talk off like hoping you. market question plans and if your morning, share e-commerce were online kind is and Nik, offline you Good share then and and Thank we'd increase Tom your and Mike, on actually Steve just to Garmaise about you online? we that congratulations

Mike Hsu

well proceeding e-commerce, for us. I very again, think Yes,

of We're us China, Korea Our three shares. online shares are markets U.S. offline generally big our The are ahead and for the even.

business our year. double-digits up is year-to-date as as seeing this growth markets last are year it we other strong some was Overall, in well. double-digits Although some

feel so we good that. about And

a innovating Steve, terms teams also some I don't partners. we it's teams is spending Most China part, the think But lot maybe with are the off one have I channel you -- results. they're press. think deal in advantage forward it world effectively us great great they're in recently, they the that I driving know, our looking of think even seen driving can I a was is yet. of in we internally team terms -- how efficiencies how with and of number pretty were data in ranked know even job how mean, and dealing we are around their news e-commerce the of and which leverage think exciting more e-commerce I that forward. their in doing going

Tom Falk

the offer wherever mom And Steve, want be I mix product to the shop. we that just to will just add present with right and right wants

e-comm. of a doing And so, lot we are

lot captured ton a but really mortar doing of of and data, any doing click and collect. that's also a -- brick of our serve we is retailers that. on not are are And retailer our working in we're We every who

do right we've we right strategy. really want part, really to wherever the her overall offer got yes, mom make And looking the so, and shopping sure is to that's

Steve Garmaise

Thank great. you. That's

Operator

Thank you.

Andrea next question Our JPMorgan. with from Teixeira comes

Andrea Teixeira

news. the Mike Thanks. on Tom, congrats Hi, good morning, and

but too. So you now assumption North I declines comments, in America volume North of all the your particularly what oil of headwinds pulp in to for in and appreciate China America competitive consumer are the commodity prices? in the separate And and also end embedded question - tissue upper Maria a environment on and China had and on all X%

So volume to commodity you'll share just progress And pick Or not be innovation timing before we more you terms the putting the what as going as you as behind is but cautious in you given are on expect Thank in you. into headwinds are you on key the of investment money XXXX? just you while your into marketing competitive up do assume XXXX, losses? should continue commenting cutting? continued XXXX that or are you to investment tax to broadly said in innovation that

Maria Henry

will that of the commodity that about Running on are be be start commodities, on for than full will the through and with are double XX% we And that key expecting super-absorbent, will polymer have. be ahead XX% we some year. it the The full we it that expecting expecting eucalyptus SAM, I'll up questions that for year, Sure. then up with are our you for the low year. more assumptions up full same digit.

if are commodity And our a are that the expectations. commodities so combined be I over about drag full just operating is you expecting think currencies at And those profit. year, XX% noting look for our and something worth that we on to

significant it So, year. is for the

Tom Falk

trends up is was improving, low quarter. share were of mentioned volume recently And would - our competitive I have a you think the about think volume category double our digits. up on on the Yes, I childcare were America poiny are North the because category overall mid-single but infant up front, think the if improving performance. mixed Huggies or I But Pull-ups the volumes in it's and I childcare, I obviously digit, is North take say More the America, performance. trends that improving. I Andrea, think

we And we there. feel where that about responding I well so innovation put is. out And the category think to that is good

pricing been in impacts. of but promotion come it's inflation good commodity big our think in And headwind. back year, the all that challenge dialing think of the is a that have tissue things including also is the And of in we one and job big sheet But a terms does some has with reductions. done both The count back. I that they promotional the levers given share pulled activity. a consumer chopping I significant team reductions this have one volume

that's that yes, has what effects other some we adult care there. of so then I the challenge. been the And mentioned, And are seeing

points about X I kind improve. focus we it area for of And big where us in to that's think down share. the was need

Andrea Teixeira

Thank helpful. you. That's Okay.

Operator

you. Thank

UBS. question with from Steve next Your comes Strycula

Steve Strycula

morning. good Hi,

a year-over-year on we question shakeout to of where this Wanted how in speaking So, say I had point follow-up. regional Are bit are new that the where an diapers. seeing seeing asymptote, industry? didn't a the Has have now of of trend fallout or And is then industry? a little are entrants? competitors kind you you did the I local reached in basis? And there the already, a China business competitively and know we if on

Mike Hsu

last the intensity or quarters couple in escalated. to has maybe personal few I would And the say last in was just for that our in quarter offset growth Steve, We not some think, I care in of years the to reference, in strong organic the give teens. China sales you us. care Yes, competitive some were the but fem had of down in diapers declines high enough

the XX pricing in to XX% QX. back about by so, And market diaper dropped in

so of the the pricing, year. about this we blown so are in single our even were mentioned But down through business as Overall, way working our through is of terms. or And terms flat and And up category value in digits impacted kind now. right with that. think our that's high I category business far volumes volumes earlier, I slightly

these price don't personally despite believe So the I commoditizing. all category moves is

effects of to perceive products interesting consumers some are you that new interested have trying And be are or they they of are products quality that seeing are local the that high in. or attributes

And We we excited have are have out really products. offering responded our the we by there. upgrading about that

China in we to of the largest now the continue all going that us. will world in muted right diapers. to continue the some It's to is is activity. grow. for price be, impact It's because of However, critical market and

offering, on great And obviously price. drivers, we so, China a which value a are right competitive to we for the in product includes going going focus the term. compete the long And right are marketing and to

Steve Strycula

your I Okay, brick have And China, could United this you. structurally in to what mentioned the three relative Korea, you follow-up three markets that comment currently view on and And top -- mortar? penetration then your driving is labels that market? the What's private last across across and roughly under context a indexing call Thank online. diaper you is great. online, quick States, for just

Mike Hsu

overall missed first of in sales highly it's China terms be talk retail very And culture. long the overall to think they Korea the I are a in seeing our to across right country, is North U.S. that then it's as teens the say are still America overall. the And the over good to And same about people the in shop And XX%. the is of all online that well. developed category your want overall car part, cars, thing almost diaper second our slight to or you Maybe question. I is - bit the part U.S. of partners going mid still But in little -- development. would online have Steve, so - XX the And when growth I sorry, store. in as XX% part we say as more very behind. the they tends now

Steve Strycula

relative mortar Yes, on brick last share the and call you online at order. label the private indexing to under mentioned a

So I just fosters is what subscription-like repeat very this a that, business. because purchase almost driving structurally imagine as that rates and you see good rates do curious

Mike Hsu

is some good well a under right of to that and are getting place and as And indexing. is teams put those private marketing that of there activity have online not sophisticated I business is tools. marketing performing is activity don't marketing I a the in Yes. managing our say our would the better reason now why label hypothesis through digital tools becoming and increasingly that. are we lot to are online drive that

lower And so a that might why be you label… levels see private development reason of

Tom Falk

Steve, And to would one. one two I'll with is environment, say chime on things, then, you get interact that product. store the I physical in

you packaging. see can so And

getting you to not not getting you feel may online buying whereas but product, you what you if able touch are necessarily may are and are you you know know private label. a what be the get You are to but know on brand going

in I have distribution, little a may on XX mean then secondly, may seller distribution. large bit a a e-tailer is to on hurdle items it So super a XXX,XXX couple of have items million And front. their that and

could of label private and not managing categories another factor. trivial of complexity number a is is across this a that be So different

Maria Henry

we brands. that our have having consumer trusted what also And with that what have important. are don't consumer ability and are to about you to is Yes, for concerned -- failure described, online think that you to in the and brand Tom they categories migrate tend and they as when issue, the rate interact you that are our the consumers a product shopping do have brand that

Steve Strycula

Congrats you. Great. to Thank both.

Mike Hsu

Thanks.

Tom Falk

you. Thank

Operator

with Our Jonathan Edge. next Consumer question comes from Feeney

Jonathan Feeney

Mike, what on Tom, but in you mix mix, much. segment know because and margin, of of another and you of a noticed way would I much congrats three about questions something are commodity thanks, with or -- morning, in mix that on have really. prices? biggest the question think positive tactical only adjusted two Is and in dollars. A biggest each year is any, positive of great Good there say? the Thank how I the that congrats this And luck. sources maybe of of is What a that's intentional mix, terms not positive very run. you way business on of best higher if is gross broadly as a I total the one coping factor of

Tom Falk

Is Yes, Absolutely. it intentional? I'll start.

be give and And like can't would price further challenges, to of point we So, your accretive. about to easily you you all get mixed innovation typically try our if pricing mixed. to

try performing the And up-sell so, the will better to teams item. value

motivated sales teams are And so, our absolutely that. by

offset drag Now that by which force mix as business can some channels. of headwinds in large, you and face from and growth some we will be some we're hope and things some a other day-in the the improvement larger would we see packs, that of sometimes countervailing on us doing mixed give grows in on that, day-out, the but format can

Maria Henry

was year-to-date. question, quarter positive the in mix the profit the on And contributor and Yes. definitely a both third

Jonathan Feeney

much. very Thanks

Tom Falk

Thank you.

Operator

At you. queue. further questions we time, have the this Thank in no

Tom Falk

have Everybody a in look All day. you We'll this the conclude We with and questions forward appreciate speaking to morning. call, everyone's January. good right. we

Operator

morning's Ladies and gentlemen, presentation. this that concludes

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

Kimberly-Clark (KMB) 22 Oct 182018 Q3 Earnings call transcript