Kimberly-Clark (KMB) 22 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Michael Hsu	CEO
Maria Henry	CFO
Paul Alexander	VP of IR
Lauren Lieberman	Barclays
Nik Modi	RBC Capital Markets
Ali Dibadj	Sanford C. Bernstein
Bonnie Herzog	Wells Fargo
Olivia Tong	Bank of America Merrill Lynch
Andrea Teixeira	JPMorgan
Steve Powers	Deutsche Bank
Herb Eppich	Jefferies
Steve Strycula	UBS
Jonathan Feeney	Consumer Edge Research
Caroline Levy	Macquarie

Call transcript

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Operator

Ladies and gentlemen, thank you for your patience in 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 would like to ask a question. pleasure today's my presenter, now is to first introduce Mr. It Alexander. Paul

Paul Alexander

and Thank Conference Welcome to our Call. morning, Kimberly-Clark's everyone. us and Henry, you CFO. Officer; are Chief good today First Executive Hsu, Mike our Maria With Quarter Earnings

call. our year. with that, review the After will start will outlook results We'll and provide usual his for for of agenda with quarter full first finish the as Q&A. Maria Here’s our the results. Mike a perspectives on

today’s of Web presentation We in the our a have of section materials site. Investors

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

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

Maria Henry

Paul, and morning, for everyone. Thanks Thanks, the good call. joining

the increased down progress low-single the margins That Adjusted earnings full our were with share start net performance. to by we XXXX made per said, operating year profit Organic compared prices. X% quarter. headlines digits me selling higher with driven and Let for solid sales year-on-year.

we track overall on with Additionally, we’re return capital continue plan our cash and to shareholders. to

cover the starting with sales. our let’s details Now results of

start point good from rates. a Organic few currency top line while full-year color our Our first provide up to fell quarter with which just will target and a X%. net sales more were increased X% product mix is for $X.X growth. volumes minutes. improved drag X% year-on-year a sales prices X% Net billion. selling on That’s in our down X X% X% were relative Mike

profitability. to on Moving

XX was First XX.X%, year-on-year. basis adjusted quarter margin points gross down

to gross the million operating adjusted compared were operating quarter. margins basis year that were a of XX and ago. First $XXX XXXX in with drag encouraged year-on-year points, Commodities XX.X%, and year respectively, XX full levels. margin up even I’m the quarter was

fiber, fall While that prices I bit polymer and sequentially. North amount, to is pulp, America see was still pleased a a meaningful market recycled in for

reducing were Foreign currencies by operating double-digit rate. profit also a a headwind low

selling Our of the and prices offset higher in currency focus quarter. on we headwinds commodity faced achieving the net much

of $XX FORCE We was and That $XX also program. make $XXX good our with million of million. continue On restructuring of savings our savings consistent that, includes to cost solid million which restructuring with savings. progress generated we plan,

care X So expect sell. was I was to intend was between-the-line bit now close year, reduction for approximate personal Even we the as announced that our up quarter, spending facilities spending we driven the Compared that of to to as the between-the-lines We’ve of facilities XX% this to far Advertising savings. year. or North of up percent brand. planned a down in full announced to the spending investment, with of we’ve America. closure sales first two the outside XX sales. support by basis points total continue restructuring our move The XX a quarter

operating adjusted X%. all-in-all, was So profit down

year-on-year. That X% an from essentially line, rate higher per included a down lower count. a tax share bottom by were X% earnings the approximate On share $X.XX, adjusted drag offset

driven million line spending in with cash to was restructuring capital in Cash expectations and generally operations by year-ago million payments. compared efficiency. by turn working was was in quarter. decrease capital $XXX the Let’s quarter Capital higher The in million and to provided quarter. $XXX our flow $XXX and the the

supply is that’s projects. driven up year-ago the chain by period expected, and from in $XXX As restructuring million

We capital continue friendly ways. shareholder to in allocate

the and full be year quarter continue between million, First and we $XXX billion will $X dividends share and repurchases billion. expect $X.X totaled amount to

savings. a product mix point. our even were and X%. Personal selling year-ago and more than growth Tissue, year-on-year. cost Net segments. sales XX savings. In points up were increased period. prices was margins XX.X%, volumes Consumer Net each sales Personal organic increased were The improvement X%, operating organic by sales the with up to driven In prices basis Care and Turning up organic Care, were X% selling by was margins K-C year-on-year. sales rose partially were operating by currency offset basis lower of of offset Professional prices and were Tissue operating mix XX.X% X%. by and in XX X% a Results In offset Consumer XX.X% impacted which by higher lower was even headwinds, inflation while margins volumes. improvement K-C volume. commodity down pricing X-point Selling grew organic points. were cost Professional,

and to start Mike the results plan, I’m all-in-all, full perspective to for encouraged relative solid progress. our off So now and our on his outlook. to by year I’ll turn we’re a over call our

Michael Hsu

I’m to morning, and let going encouraged organic my and year full by Thanks, Maria. saying first our start focus sales I’m our me on comments everyone. Good quarter by results. outlook

prices. realizing We’re selling making higher strong progress

We’re in our growth investing launching innovations, financial we’re strong discipline. our pursuing and priorities leveraging brands our and

which our grew year. quarter a we been reasonable. track good to the our on has on sales in volumes Overall, are X% mentioned, is initiatives the just to date pricing impact Maria As organic the first and start

portfolio. Let adult me grew quarter, In high-single pants increased for increased investment, American across organic and child Care, training baby care consumer were low-single markets. up of category Pull-Ups first digits sales our Volumes American prices the the growth. X% Personal and selling in in some digits from premium with Huggies innovations, brand share X%. North developed Organic benefits sales products. on diapers. highlights quarter, the with In starting care and increased North top line Volumes increased we

premium X% hit innovation market strong American Consumer diapers In this North driven X%. summer. increase X% compared Looking Huggies to going this the ahead, were Tissue, selling we promotion down organic prices sales have quarter a that Net Poise year to coming innovation was that are activity. rose on on last and by pads

the In X% K-C driven confident organic solid of are overall continue our American focused track. realizing benefits sales activity, Our price monitor remain to price impact increased on on increases. competitive by volumes plans We’ll we Professional, the pricing on realization. and the but and North

continues to developed be and to were softness. markets category’s that North up lower organic by rate, diaper offsetting growing diaper Turning a South other our impacted sales are outside In our business Korea, X%. businesses America, birth while

solid and rose growth In organic in Central in overall and Argentina, which and had that consistent from X% of our Professional. emerging Western also markets, nearly We points performance developing Europe with sales K-C included is XXXX plan. X

continue Brazil, diapers digits. to sales continues higher In sales were XX% that grow compared In Huggies our remained In mid-single-digit volumes China, price In about at by driven by digital sales our by trade-up rates driven organic competitor driven were terms about diapers last businesses, and sluggish. strong selling XX% double-digit in a on Nonetheless, category started key marketing. in impacted ASEAN, base year. Care rose increase period. Personal volume innovation. strength the care, strategies Growth in supported by strong Huggies our be organic organic on we was product with while of feminine to prices reductions Huggies innovation, down premium-tier by the to high-single up rose Vietnam.

with increased Europe, Huggies both year. nicely. sales prices We’re In rolling Eastern organic improved in ASEAN markets and up volumes selling XX% most about this out

of marketing. combination Our excellent momentum great reflects the innovation backed this region by winning sales in product execution,

and innovations on this launching Huggies We’re year. Kotex further

quarter businesses remain adult care, digits we we’re These progress. in grew growth the our D&E, sales business I’m strong fem baby While organic opportunity diapers pleased making in biggest have wipes. double care and that first and in

and of to our terms us diapers our Korea, Digital our care we’re year. and grow improving about the digital in to build start many is using adult summarize America. China one-to-one South helping I’m marketing, Vietnam Now relationships. help ROI marketing in digital of on markets our us fem in and line, like care North in brands top To optimistic consumer in

more continue to environment. we in work to have We a do operate competitive and

encouraged progress that However, far. thus said, I’m our with

comments briefly about sales, I’ll moving margins. build Now just beyond Maria’s on

I’m we performance encouraged need more progress, year XXXX first to quarter While our full that levels. above was make

Turning to outlook. the

As new adjusted growth X% outlook of morning’s for XXXX organic calls share $X.XX previous we to confirming mentioned in our which release, for sales $X.XX. we’re per earnings and this

in we key assumptions the planning We’re also outlined maintaining January.

results likely first in going to quarter the year second compared the of earnings higher improved view to has year. initial we That our said, compared earnings half. somewhat the of the the to be somewhat half still are more it’s first Our profile our believe

going have teams a execute continue to Our we’re watch lot to to closely the next overall environment. and nine over months the

XXXX. work achieve are we While we’ll Strategy longer-term to of opportunities growth pursue the to our continue sustainable XXXX balanced K-C our all part targets, that and

our for we’d off take in we’re solid ability summary, confirming That our be in to to value. And your start we’re to year prepared create confident questions. outlook year, the remarks. and full a shareholder So our now happy concludes we’re

Operator

you. Instructions]. [Operator Thank

Sachs. Goldman first comes from with English Jason Our question

Michael Hsu

Jason. Hi,

Unidentified Analyst

on actually is Jason you guys? This Hi. Cody How [ph] today. for are

Michael Hsu

Good Cody. Hi, morning.

Unidentified Analyst

commodity that still last to us XXX provide provide Does Can Previously you you hold? can like you commodity XXX you your also by on each And did stated outlook? an quarter? inflation. million details update of million

Maria Henry

Maria. pulp our with Distribution resin-based materials. than in by quarter in slightly expectations recycled on quarter. and it’s and other was materials the Cody, had driven also remains the we On million Sure. quarter $XXX inflationary fibers. of the commodities, some better headwinds That for relief

to in inflation We of are to the the at early holding $XXX our year. year. point million It’s this outlook million for $XXX

were like started sequentially. plays for prices the quoting through eucalyptus, quoting resin, market polymer, high-single this we’re as year-on-year commodity low-single and quarter have full and have of or at it on in outlook encouraged than we’re volatile eucalyptus cover And the down just XX.XX commodity by On North average. and we recycled X% think of the digits to areas metric And fiber the year-on-year commodities. up we were on on by I’m year-on-year and we impact first And when year to the was down teens the the about eucalyptus, those when remains relationship was We’re market piece America prices and and for in for And And of to X% about XX%. out. was how more in market come piece, see If I’m we up digits think changes, while to market these prices sequentially. North up price the it these, we’ll we down sequentially per we America then North P&L to America our look recycled, down ton remained with at have XX.XX look maintaining them up low-single fluff, down P&L elevated. low kind digits fiber, holistically. were NBSK, we the sequentially. if that inflation I year

it However, down on sequentially. XX% about has was recycled. fallen It

the year ago. a we versus down the have terms In mid-teens commodities first of on oil-based quarter polymer, that price was average

see digits what modest the price there. absorbent, year We’re expecting relatively polymer, was half of market high-single versus year we’ll particularly that levels On basis. in ago to And super a happens the North point at America. of run inflation or increase up and the a to sequential back America, outside finally, have moderate flat out continues were Latin for so we in of coming out I’ll on

America inflation doing. the for details you for We it easing answer. Hopefully some outside the think U.S. markets that long look very we seeing you still we’re were the a looking So, are what at when North market It’s all what on got about prices. of covers

Unidentified Analyst

very to your costs. that’s more sneak related can in helpful. Yes, question If one I commodity

I million you less million 'XX today? to assume million savings deliver XXX Thank proves think on with for XXX your Do you savings? we assumed still in does XXX outlook. onerous in on. if to FORCE. initially it based Your potential progresses? at million cost year initial expect thought, But about outlook XXX how the you it about Does FY to still to your inflation than that million and XXX savings hold reiterated should as I’ll 'XX pass least be FY

Maria Henry

to to savings – expect to are continue in deliver outlook continue we year. for the we estimate and do holding Yes, the to our savings terms of hold

cost unchanged. think as currencies, you watch price savings the commodity the estimate commodities, inflation, P&L, about with are when I that you together and what’s to remains happening and think watch the three commodities but

Unidentified Analyst

just sure commodities even over roll do in if I want force unchanged And we thought. greater to than that’s make

Maria Henry

Yes.

Unidentified Analyst

Got much. very it. Thank you

Maria Henry

Sure.

Operator

Thank you.

question next comes from Lieberman Our with Lauren Barclays.

Lauren Lieberman

something something, that in and the Huggies categories, Personal Great. you got upstart U.S. bit seem stepped was actually mentioned innovation innovation to to – on Thanks. also But of just bigger the like retailers categories particularly over this Mike traction. that the Poise brands I all Good little Procter, from but some has pace talk this activity picture was up news feel in to from morning. coming and summer. in from largest I these and be both competitor, a even I dramatically I the gaining on Care flow know you’ve around quarter want

bit right interest just would natural talk of and So brands flow activity, the any could about you of that helpful? Huggies of a your sort the summer offer thinking about on news how level can little in detail organic, be kind and Thanks. really you’re smaller in innovation this you

Michael Hsu

that would overall Care dimensions opportunities with but are to on you probably it’s I’m comfort, for the us protection, share year. think there tell Thanks, overall Lauren. things general – diapers start improved especially the on not last kind the of Okay. will and our in details all which Maybe Personal with is one. I’ll launch especially Huggies diaper consistent expect. premium strategy that’s and space, ready a to I fit, it’s you I the benefits, the this deliver of and in we

with you’re to kind in – our are just then the for think we now we’re innovation last I really and deploying this need And that regional get our strategy up terms around after overall would the ramping like rolled team world more you it approach quarter, out about in the working cross-functional things highlight product are and teams of Strategy with know and impactful talking K-C of the executives, working does earlier teams market launch launching while it. some kicked top efforts. tell we’ve I a the over our and teams America it I XXXX our off or some we or in some past probably to so this we’re year though for the we’re opportunity. the year that been now, of of North that so, of the of launches past summer of kind the this product some of accelerate seeing just

innovation. overall, on So a big opportunity

niche now going to on smaller is still to two, a your three and with one opportunity to I’d probably at. something organic, opportunity North right we’re think it’s and question natural a say it I that – America type share continue or look

question the because I really I brands tabs we – and like side around what keep and still of some a brands and is North done think keep the we on big know the relevant America small Maria food markets question there. smaller still have tabs

about an we’re us that whether for there opportunity on there is think may us share and I a so And question yet. to details But ready for there’s not there be.

the We are chemicals market pretty very we’ve pursuing they’re and of very, gotten more points. on the any couple good in a Korean doing in think world just a a job of natural one and I than doing where organic our sensitive about share a brands of business number and and contaminants which is well most market that’s

Lauren Lieberman

for kind pointing them guys been you have there sort you wouldn’t things is market of of the Korea, done what’s with reason innovation, of Mike, very bring the bring a a lead of and you’re quicker consumers discerning for having there to move and why taking markets to group already it shift working lift other a to to terms terms market long moving out a U.S., Korea with of example? share some quicker with of South to it with in very, in

Michael Hsu

in we’ll it. or question. flow perhaps but was you some and later world. about is great diaper joint product see I going And into like a forward some part term point. think North more this the kind I – U.S. to this development care that’s your Definitely also say Asia-Pac of shift of faster lift that’s America which think collaboratively new apply, talked Yes, fem that and the – and summer will the feature I we focus we’re that out natural a of and really in I the coming is adopt way that’s then America North this that And – at think I work trying around

Lauren Lieberman

Target with that this what to much the been into guys they’ve where niche themselves? bringing sell own of their flow to to in went right, some that maybe there’s their flow be to maybe just up charting it with opportunity, there’s versus news started I it’s new of Hello little but announced news a for it’s paper yet, right. so well you also curious course into those launch – much may products, go again Bello, conversations, be this they you not they’ve in They space – want because Walmart a seem There’s even diapers of big think behind Target, but own way how Have shelf today. be today bit in to retailer from retail just see, product funny sort opening

Michael Hsu

Yes, yet most that many I’m have of so though details this selling They our started on with leading not receptive it right major partners in customers will with retailers with opportunities. your all the I they’re some on first are brands very you now. point product to our why But and major we I do still kind is discussions categories. sharing innovation. pursuing we’ll these collaborative which haven’t as tell big retailers big and or them of work of we other think

Lauren Lieberman

and back the you. on I’ll I’ve Thank pass Okay. if time. got it come

Michael Hsu

Thanks, Lauren.

Operator

you. Thank

comes from RBC. with Nik question Modi next Our

Michael Hsu

Nik. Hi,

Operator

line just One Give looks a moment. dropped. it like his second, me

Nik Modi

Hello.

Operator

All right. Nik, you’re line’s open.

Michael Hsu

Hi, Nik.

Nik Modi

right, capabilities, and the cetera. in when there’s marketplace clearly money of innovation, a Sorry about delivery to this the et consensus on, landscape, at et you? I nice are CPG CEO philosophical as your I least cetera, as year the about think first level question there was Mike a the How just across and all generally disruption quarter it’s priorities, Hi. to you. relative you Thank think this you Okay. given spend that. guess over about guess stuff

for make think goals first like year the high or on the spend. how a lot curious of to in thoughts terms year. guidance, costs you on look, can hey, there’s we So commodity I’m coming hit the down about of, hey, the your end is This just

Let’s think you some you go get how hoping just guidance it. can give around I about that. was

Michael Hsu

company my predictable is maybe Well, on earnings maybe we midterm and this is growth right. I we near-term deliver focus maybe I – guess to which think And delivering consistent, the the positive January, and is do and objectives in want outlined growth. sales culture

Nik, we’re encouraged along a step way. a I especially encouraged on think of us and the will spots it, the saw though I ASEAN, broad a the So think point quarter us the UK, range but for couple for margin a we and price solid improvement bright it’s improvement, broad out, Europe, Brazil, U.S., quarter the were by was all this of India. quarter I markets Western Europe, across Central/Eastern realization by improving;

on think I track, heading that’s obviously P&L. good the pricing got a of And the our helping of shape So the right we markets that’s direction, obviously in being so lot then a thing. with

Nik Modi

you. Thank Great.

Operator

Thank you.

from question Bernstein. Our with next comes Dibadj Ali

Ali Dibadj

Hi, guys.

top So I have flow. two on cash one questions and line then free on

struck Care that’s a outside developed spending so given mix not just to there price to the perspective little the on so advertising, the being that good we share Is you America, North developed for average. if market negative top maybe of area and were price I’m my diagnostic situation that that the area was not line X on take head It a scratching the bit and down me so in benign wanted it markets, about that. you’re given it’s Volumes North America more take everything Care But in way? that but terms I Personal pricing markets your excellent. Personal commodities and denying in along fair, in more about flattish Care outside then together, mix the given price perspective, unable going as in NA why hear up, element yet Personal developed about think on obviously PCNA competitive that from comment First particular? then for markets, what’s just just looks happened like

Michael Hsu

have probably the through at count biggest is North in of our end rolling now. bit lag diapers mover Ali the is the probably we’re Care Yes, a through of and America, and most and of which a that’s driver on started the still rolling doing it’s thing pricing Personal that that through biggest quarter we maybe first pack a on change

the so why get lined And took that But for price not It on. now. that’s to up expect a that little we seeing probably and to we will as as goes rollover. year big a had so you’re continue time much us improve

Paul Alexander

this where The marketplace competing time. declined hasn’t bit rate, developed and pickup in Central in Ali, pricing the and And Personal in Paul there of Australia little of price South came lot a pie a and speaking this primarily markets North in the a broadly been is Care South growth been smaller decline in so Korea America, QX, getting there to outside given I’d that’s a say is in in pursue a Korea. Western over the bit has birth in everyone Europe,

the In and an combined basis mega do and our the will, you on shares might asked including terms continue a or little non-measured strong seeing America you’re if to club of and be because in even channels, pants are year-on-year we better tracked in in outlook shares, than that you e-commerce. bit data category, across North about diapers

Ali Dibadj

bit you that’s And and Consumer or particularly North downtown elasticity talk America, how they’ll that’s on outside balance opposite to markets, little X. a developed then right, it both tougher Is about throughout Thank think you of year? you’re the Can continue pricing, seeing where better forward? balance going that a almost or of it call about North going very significant commodity kind you. the looks do be CT we Tissue as the down the Okay, ONA the right bit a America so question, because I America little but get helpful. North the and costs

Michael Hsu

plans regard of had maybe to last think I first we events point big that set that Yes, with a are is the pretty in the year. QX we cycling

and up North was in last think XX% think up was over year almost X%. I America volume organic overall first in For I quarter our Tissue reference

cycling we so And are plan took year. of this those We promotions that. out the

that of a plan. difference, timing it’s the it’s it’s So not just out

the year so so we a effect QX that predicted. we’re right the overall now probably therefore that is I promo this would is and change I think in as We on. effect, say had And elasticity predicted as separate

one brands think in eye our watch long of to on haven’t volume for think I overall share on and we seen other be – sticky the one we not expectations think so us and date. on the so it’s labels is private to or that make our The as our price little thing our pricing out is the I is I are line we’re term. with is yet keeping on the to track thing our that. some some upswing, of move ready to we sure the smaller have adjust a necessary up We’ll plans protect keeping the eye the

Ali Dibadj

better in going up. expectations just we your that should was want you. of I what you free year said question looked flow what’s tougher expect here. the point, cash get capital the And going conversion change? to a working and kind It of a little bit last that free my flow Thank But on make for sense forward to Okay. cash

Maria Henry

capital We at Sure. into really of that’s had driver what numbers quarter. line year-on-year the for in in that you and there increase was In an the working that. working look quarter It expected. we On the capital we went the and cash down in flow, first when restructuring cash big factors higher with it number a were was payments. had first

stronger On out the to first than paid the got and expected finish we payable quarter. in had those side a entire XXXX payables

taking the of level higher on of two so had quarter side timing the also into in of On a ended causes or the and balance. up equipment the days offline. and as chain get expected, on supply then including moving the we portion advance of of which collections are run as number sales inventory we we program receivable we factors equipment build inventories, finally the a the sales there on lose Sunday, And restructuring basically a in we that

happen So of in and January we we slightly down operations expected we to year-on-year. to first the those would said for factors And out from we in quarter. as the cash all play be expect saw year that

Ali Dibadj

guys. Okay. Thanks much, very

Maria Henry

Sure.

Operator

Thank you.

with from next Herzog Our question Wells comes Fargo. Bonnie

Bonnie Herzog

bit All right. a guidance question through on a actually next of a but line the couple comps your the growth full of on morning. Thank year you. Good the X% year had quarters. I balance top of sales do in easier deceleration which implies your of the organic get

of could So interpret conservative of last if I guess in should maybe the of we some I something want higher about there’s we lapping this to just maybe guidance else if growth be or as I’m that guys should context moderate? your then thinking understand aware that promos you cause to And the you had year.

Michael Hsu

have have to a plenty in. that But progress solid still do to make but of we Bonnie, XXXX. maybe can strong work we’re I’ll start and we chime making Maria maybe sure

with expectations, are watching we especially. as line I lot effects the of of to even now way alignment and and early better just maybe eye start with said we are the Ali sticky it have little our watching kind we’re keeping The so is in and does price still broad to pricing, mentioned in of have actually So up on be competitive slightly ahead we’re markets, on D&E now that. thing we a we elasticity a our seem that are we’re while in encouraged to the Nik days I us. a just across lot there’s improvement of

work We’ve wouldn’t us nine reasonable lot a we’re of – middle number. got is months down I our the ahead So is think a of to which I calling what X% for know it go. for all There’s we teams. and believe

Bonnie Herzog

if couple just I could I with on a innovation circle of questions. Okay. And to quick back wanted then

during think as you back innovation full the then you driver you a do year, could quarter? weighted second, the your year possibly sequential margin the accretive what in as more your pretty improvement this was evenly margins behind that spread half new innovation saw new Thanks. how future? you throughout the First, the And is some expect pipeline characterize it curious key we would out then and or of And roll products? in

Michael Hsu

maybe of the launched say but back fairly we’re would from touch half getting think the is impact I still Yes, now innovation the year. last I in balanced, we that tilted a overall I to think benefits some although

So with taken we’re organically. the of have high American traction That the we in uptick, launched adult it’s for to marketplace in a last where now. this in get think example, while traction little the that was care year we quarter digits discrete on that North I backs has getting but single which innovation an sizing up

So robust think plan. we innovation across a pretty balanced quarters. I It’s have

In have I to I that in by move the categories we’re but it, making means worth price a point of so premiumizing general number innovation our elevate strategy where accretiveness, premium categories with is it the terms exact aiming higher accretive. hopefully don’t to the our think to

Paul Alexander

essentially out point one And changes was three you a was quarter, look I in it that point as in and bares a up think up at if all a between company mix and half Bonnie the point sales the segments.

making I strategy we’re comment progress. So to good Mike’s early think

Bonnie Herzog

you. All right. Thank

Operator

Thank you.

from comes Olivia question of Tong America. Our with next Bank

Olivia Tong

spend. talk marketing about to morning. Thanks. little a Great. Good want I bit

obviously quarter. a you talked met about quarter this it that that was we and You and February in when last up lot mentioned

to going where So dollar bit as a or share the Was QX of can or the sort things to it did then and actually point forward then of you magnitude this is just should you. high start little digital, quarter are whether it’s tradition increase expect and from continue the lion it? watermark sort of and of it from you the the that Thank discuss we order spend of year and you just some is progresses? increase normalizes here a a expecting of this it of

Maria Henry

Sure, and I’ll start jump Olivia, then can in. Mike

consumer actual encouraging year-on-year. portion In up and well. from impressions up an advertising in up spend, it we the work full getting terms of digital year and that of of that as the the to we not quarter is first that expense, the advertising to only be continue P&L shift as we but the up the our also And expectation we’re will down it it as more for drive it non-working is spend on is because that was have our

good brands about we’re I doing if know to advertising. you more And innovations. and behind Mike, in support the the what don’t talk so want

Michael Hsu

maybe a overall diapers digital. one, things most think Olivia, with then notably most I I’d support. couple care to brand think investment specifically of American North of is say And in and a of levels brand is it overall weighted and which adult couple Yes. I key increased brands in

making we’re we’re And perhaps in growing non-measured paying so digital that us strong strong doing search stuff investments faster the the seeing some well. why is for in of and reasons the very channels and we’re that returns that’s and

now pretty there have putting rolling we’re out good I now content new messaging about Cottonelle we and good terms that feel out we’re being right some effective. the very We on also which in of very, think advertising is

but we looking do can I think good overall better So We the still, where progress. know are. we to forward we feel of kind about

Olivia Tong

expect you we to And Huggies? innovation this year adult increase this about talked in both and care upcoming the as should

Maria Henry

breaking that of this of the is question? year, The kind benefit up. You’re innovations

Olivia Tong

I’m sorry.

the or terms the to that in you innovation In of increase as are increase – as we advertising expect that’s advertising, to should as you especially within fund we expecting advertising, coming? year sorry, progresses support I’m

Maria Henry

Okay.

I a I don’t going want you advertising the into number once year flow. to are to know As and get quarters the disclose think how we only

would year that the in suffice be up it up we that on So will the expect also. the and whole it say to P&L quarter was for first it

Olivia Tong

you trade it. Got benefit to of commodities related on the that versus attribute on things can with just you’re increases to lastly working list respect And the about would straight pricing of just pricing, some how innovation? efficiency you much talk to price then and

Michael Hsu

Yes, think I mix. that’s overall an

I the list pricing buckets in number but for exact some big are maybe us majority and form of of say it’s pack straight it think probably I I right don’t QX But have would the is changes. or think I now. count vast an those – whether

especially I now, the America show how we the a would big I programs it’s doing trade priority don’t a We’re up much on with in job in there. making organization efficiency some progress and good it. they’re P&L have know North but know and for right

Olivia Tong

Thank you. Great.

Michael Hsu

Olivia. Thanks,

Operator

you. Thank

next Our Andrea JPMorgan. comes question Teixeira from with

Michael Hsu

Hi, Andrea.

Andrea Teixeira

Good Hi. morning.

on Brazil? it to I pricing in little increase the the in detail. a was believe quarter, bit want you that. lapping you the by XX% driven check just and can growth So comment And organic I this were appreciate price third

So of Thank cash side working one conversion of detail she the a appreciate or flow. of I are and the finally and a these I the on following wondering the bit on was commodity competitors are easing Maria the little And capital. also follow-up question they can aspects timing are now cash finally it. retrenching given the for pressures now? you. CapEx explain if more the

Michael Hsu

Okay, maybe with I’ll Brazil. start Andrea,

in experiencing team’s I down the all, there characterize a we’re doing great growth is of job consumer environment. what First a challenging very strong would and

up as digits, Our digits double were said Personal volume Care prices we volume selling low was organic XX%. up Net and single Andrea. about was up

there. there So defying not or we’re I laws think gravity the elasticity of

market strong number they’re advertising what But I There’s that say would like would think value why it of this important. really execution good is them. of handful It’s elasticity team a strong out overall building commercial than our is but and execution one sales right down working little to look capability the there’s performance, that’s and say in commercial is volume comes better the is a in result of doing. expected however, which commercial local Strategy of laws The lagging the markets a so I execution, competitors XXXX great defying really pricing overall K-C great was maybe brand generally proposition a direction. the bit. and of moving that is a I are together

Andrea Teixeira

it. appreciate I

Maria Henry

Andrea. ahead, Go

Andrea Teixeira

Maria. you, Thank

was Mike in appreciate you wasn’t said I I it sure if initial you comments negative. when so said – think I the sluggish, So

So you’re saying which volumes are digits still encouraging. up Brazil in low in the is single

perfect. Okay,

Michael Hsu

was digit. single volume low down the Andrea,

Andrea Teixeira

okay. Down,

Michael Hsu

digits, said. Pricing double what digits have was digits, model but would low pretty than down would volume better elasticity was double and the I strong say way single up

Andrea Teixeira

you. Thank perfect. Okay,

Maria Henry

with at million expectations on it really chain then this of XXX And kicking line CapEx our restructuring in supply year. and the reflects portion program quarter, into that’s the the gear in

for to started come the CapEx you the quarter. in billion through some year continue to we first seeing and on X.X X.X billion that So of expect

Andrea Teixeira

you, Thank Maria.

Maria Henry

you. Thank

Michael Hsu

Thanks, Andrea.

Operator

Thank you.

Powers Our next Bank. Steve question Deutsche with comes from

Steve Powers

Personal guess notable where at in Care I Thanks. to seen strength least we’ve was relative wanted scan really what I on the data. to U.S. start

So going just element of maybe about we an growth some that’s comments that think this on that running should and how saw of quarter whether channels kind ahead how whether shipments of just that’s consumption, forward? strengthen momentum on the and you track or

Michael Hsu

that for the I channels, think thanks about non-measured quarter. strengthen up category question. X mega Steve, in Definitely overall the in was points

for just increased digits low that’s Our mentioned was think and especially share as by Growth and really performance product strong was was Huggies overall investment about support. single were been and mentioning brand as e-commerce e-comm I Paul about driven strong talking flat. in up brand primarily digital we now. non-measured channels strong our is effect and a think a in program worth working and us really it’s customers club across right good and club. I that we all got And very and that’s

up in Personal the by as Care. single well. Pull-Ups is progress high encouraged we’re So digits

business moving high and direction. care up in digits the right is Our adult it’s so single

Steve Powers

was term, medium as terms the agree XXXX, deservedly your if duration just of expand is tied great looks was And bit of and seems which to cost have hold this But through conditions out you question order thinking you’re results get profits is the my the to called pricing really in the and on productivity not the to about strategy? really some inflation focused flow this inflect like you that They today’s because yet have confident next remain other year-over-year on that out do quarter, it hard K-C – great. you’re to but what bottom little then building maybe to it broader those initiatives schedule. a sustain the to so bank evergreen And forward, to stepping of over assess move quarter a having lot come underway back is and I better competitive today positive. versus volume you just ahead underway, still macro thinking in this call dollar improvement very it the hand to course operating model on reinvest and I’m pricing How in versus share lighter. FX The result. line even to have but medium-term competition? year like should tone you you as ability you you dollar-based on to as how of quarter about like say a Strategy more Okay, Mike I of guess sounds

Michael Hsu

really development our for really opportunities consumer ahead value-added of what leading categories this excited of growth we elevate really the of emerging innovation think and with has call three kind for good really, or the think and I’m the markets then as I I Steve us. or big that really And mentioned robust growth are company capturing are were when opportunities I together, core developing growth premiumizing digital the relationship which building strategies it. of the the about is me I

a job management outlined handful sales and we’ve progress on pricing capability growth with our our better execution do accelerate digital revenue execution, or doing innovation to management. think or I a of innovation, have areas that also to

we’re that with I Brazil driven capability So say the of those the mentioned execution. and to in would are commercial our areas just build progress organic on our also starting we’re is four is one reasons it’s by big strong improving where planks. play it’s these four encouraged pricing in XX% and starting I QX outlined by to driven through. I why but

the thing. We’re got Eastern up. seeing going growth, across same and ASEAN Central price increasing doing is Europe double also same the good volume where we’ve digit but

the which overall think consistent strategy to it’s these stay core together I us going the delivering and of pieces focused on putting So growth. is we’re for all

Steve Powers

you Thank Okay. much. very

Operator

Thank you.

comes from Kevin with Jefferies. Grundy question next Our

Herb Eppich

for on Hi. the million one so specifically XXX year. Good for morning, for for quarter One to savings Kevin. guys. XXX outlook the your restructuring, quick just and is Eppich This on million in million XX Herb

slow. the has for savings couple last outlook been that quarters building this assumes but So of sequentially should

you. there anything be Any helpful. or aware into commentary quarter? should would shifting first is So of, any we be Thank the phasing maybe there

Maria Henry

in recall But Yes, to then that million for in savings number had good and quarter restructuring year some which January a last up. the ramp you’ll us. of it no program was last we in year is of quarter time we the first as had savings announced XX took the

relationship into XX we second to the to of get XXXX. in expectation year where through the quarter quarters look were we million the you will start million, be for when to the lapping If at savings we building XXX XXX

really so And the that’s driver.

Herb Eppich

all. you. Thank That’s Okay.

Michael Hsu

Thank you.

Paul Alexander

Herb. Thanks, Okay.

Operator

Thank you.

Our next Steve question comes UBS. with Strycula from

Steve Strycula

a on good congratulations quarter. and morning Good Hi.

Michael Hsu

Hi, Steve.

Steve Strycula

lumpiness on well had the be expecting. of lot you mentioned trend what I was ahead quarter-to-quarter there the might investment that last the in question, of some clearly So a a quarter community quarter first came and

lumpiness year? balance would you any of price sell-in end like mindful be you is there in in as the of versus for increases or of the last the year like terms lapping particularly phased QX So that of you some of towards start sell-out

Maria Henry

a I’ll few things that I’d then jump Yes, make mind. comment can in a don’t Mike We in. keep give guidance and quarterly say but

we typically quarter first Lunar first a happening the with New quarter the in benefits some have strong around and that. We Year have

as pricing And As went the on diapers quarter. move just flu. mentioned cold here in kind earlier, the we be of and final first season of Mike out the quarter, into in second of thing in terms then Kleenex the will

expect we So first seen that half. the numbers I we the be in this somewhat going to is half commented relationship of to all play think out and how haven’t to second our in we

you’re as quarters. you that think So things different lot your kind to of you think to expectations how about gives a about the going of layout on

Steve Strycula

demand a for you. on? winning market some say in were key you. we Okay, than volume Did emerging success follow think what like were generally you markets planograms you that guys any end were great. better Thank just shed the Mike it have trends if would And you’d should want up seems then improved quarter-on-quarter? expecting. to callouts some light were How key you – what about sequentially

Michael Hsu

markets part say second would quarter. versus was the last I it maybe maybe improved first. think across I broadly Steve, most where demand

And our digits fem down for markets, about China we China diapers up digits well; big another obviously strong digits; obviously still quarter; new so double if strong Argentina think ASEAN the as product double already up mentioned; was CE double us; were was improving digit I a you but go care up India sequentially through obviously Brazil up improvements. behind robust double number;

across commercial think we I are America some of improving. improved distribution There progress execution. think made array broad I markets probably think the So and and in again North here changes I some this there performance. in Poise And across And on some adult better it Poise. of made shipping product is areas. both But the quarter. improvements is and broadly have part we other across Depend diapers, just care

traction. tissue, Comfort gaining Our Cottonelle bath Scott consumer increased all is Plus

the good So kind we’re of innovation the of feeling piece about puzzle.

Steve Strycula

right. All Thank you.

Operator

Thank you.

Our next Feeney Edge question Consumer with comes Research. from Jonathan

Jonathan Feeney

very much. morning. Thanks Good

Michael Hsu

Hi, Jonathan.

Jonathan Feeney

emerging in volume volume developing and drop can who the would that commodities. It roughly the volume developing driven I little your us ongoing Thanks. the a overall seem up demographics. volume looking I’m – level share those would share? portfolio of gain just in ton update Care be to pick had loss me at volume in growth that piece and and and on a there emerging growth in Personal markets. market You would was both there in a But there volume market a and pricing market by of you Tissue, and know was

Paul Alexander

I’ll put context a more start Yes, the little and maybe Mike Jonathan, obviously just of can color. bit to give and volume then decline

our been solid are a we Argentina, volumes given are inflationary at and up facing quarter If environment a you and bit little up outcome. which all and looked was aside set pricing pretty across consumers our D&E the have in facing, the that total line China would

Michael Hsu

I We execution volume price declines think feel we most the markets good I broadly are overall commercial where our were changes. related D&E and about across so feel heading. good about to Yes, of the think

Jonathan Feeney

take So in did wake there’s and a of the loss am that just of did little I what others are there right bit like it. curious not not – share the I’m competitive dynamics that others pricing?

Michael Hsu

the major and have us it’s smaller competitors in branded I Yes, of ahead or in by the or general of market say with but would competitors thumb stickiness local of moved I some some us rule some I say line market a would as think then you players.

sharp keeping that. eye on so And we’re a

Jonathan Feeney

very you Very Thank helpful. much.

Michael Hsu

Okay.

Paul Alexander

Thanks, Jonathan.

Operator

you. Thank

Dibadj comes question from with next Bernstein. Our Ali

Michael Hsu

Hi, Ali.

Ali Dibadj

recently. Hi. to bit the detail. pricing you touch I hotspot the prepared base as in what’s China give Thanks more but want on in We clearly up. and well. us just that’s for But little a follow on been just there you more about can see it a going PowerPoint, remarks volumes the the a know perspective? some color put I from

Just want get you. please. Thank update to an

Michael Hsu

of diapers last it Yes. Thanks, is pricing I was in quarter. Ali. would where kind say about

behind for really continues momentum. us we about last premium the our overall fem our is that Huggies care and gaining strong talked quarter the traction innovation So

progress. yet really We’re satisfied but not with our we’re making performance

are price Our remains channels into team’s and And as down year. single the are Personal still They remains consumers this well. is other traction. Care elevated. sales that volume But been. in rolling our we’ll looking improvement I versus in other which be is pricing gaining and up that high across The for that better out solutions and tiers put we where improved our significantly tier up value X were has It quarter. view kind prior digit were that market X competitive and of diapers think and my in technology organic activity specifically on the in view

the good there. is So we’re building term and team for what the feeling long I’m about doing really

Ali Dibadj

from players there, do whether regional in what think from the situation or P&G? like be you Japanese the competitive looking But you. Thank is particular it

Michael Hsu

introductions. the wind visibility the premium seeing products this looking you’re in in lot We for tiers. and consumers China obviously still are seeing in we suppressed are the and I and and some think we’re don’t technology why have still on pricing of a Well, what matters additional then yet. But getting everything response that’s product that’s

Ali Dibadj

Okay. Thanks very much.

Michael Hsu

Ali. Thanks,

Operator

Thank you.

comes Our next with from question Macquarie. Caroline Levy

Caroline Levy

much. is price much things. so the which up How important of Thank outlook the so of couple is roll A polymers? to you oil for

Maria Henry

oil have full The using. as other the so between and we’re watching on that fiber-based the definitely oil outlook late been as correlated on but of has has derivative the price think of cautious commodities, gone went in we and our for remaining the prices prices as overall commodities, not when material puts the us certainly through I we been XX the exact historically, outlook about it have and the that call, up the oil the our on on commodities Yes, beginning it as year buy commodities relationship does and takes oil-based market. us materials had of

with eye in keeping oil So but it. sequential that just an with areas, mixed we’re up some we’re it’s the on kind seeing the of improvements run

Caroline Levy

Thank you, a And Right. Maria. could the for little you elaborate bit on outlook transport?

Maria Henry

year Distribution for were and cost costs the will They our Sure. and January. the full have But of be overall sales when portion it hasn’t higher to a inflation in ago what distribution increases were I we are And was year us. a outlook should to assumes for costs our up. meaningful of inflationary talked They the for costs position global. we that on distribution year. from distribution the you changed note are continue

Michael Hsu

of at the end or quarter last 'XX, of that some distribution quarter challenges. some did fourth of is Caroline, make, I’ll note other the additional And expenses we have Yes. because

is our making we and are there I think team progress improving.

Caroline Levy

you like I great. Could missing maybe way? would any about discuss you a or medium-term significant have things you on in look would If in you overall whether comment way have see participating in improved they there you. as the it your of it just think That’s the Brazil, label, in Thank couple It to threat and I’m Mexico? longer-term a whether how be And more. last doesn’t one might, something. private just – development consider then but

Michael Hsu

do on necessarily amounts our instances not label. on as of in it return strategic put strategic some the to invest produce We great in part private that not We on one a capacity. capital bit bet private a but last have business generally our taking a I the of capital certain capacity now. Caroline. right type first, especially big is don’t It’s the of generally of Maybe given we to got of think in do we is will label a

pricing to closely private I’d label it is North on if necessary. a We’ll now label, lot right moderating a a adjust up we’re that not say that. in plans moved because on upwards America note keeping will private of able and yet so tissue bath eye in I sharp bit our especially be we’re However, has

Maria Henry

flat what I if contributions yet. going on equity released then year-on-year. look company it’s you And comment we’re because not to is But Mexico say would they haven’t relatively at

Caroline Levy

only I are might Yes, of played still your you is China. Then that. thought I your there I because in on one What premium, more down? premium saw if total just largely sales but percentage sneak business

Michael Hsu

a the two Yes, for than most total Huggies are little more diaper our Caroline, business. tiers premium half bit us,

Caroline Levy

Thanks so much.

Michael Hsu

Thanks, Okay. Caroline.

Maria Henry

Thank you.

Operator

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

Michael Hsu

All and next today everyone’s we you we right. questions speak will Bye. very Thank a you Well, and appreciate with great have much quarter. day.

Operator

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

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

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