Kimberly-Clark (KMB) 23 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Paul Alexander	Vice President of Investor Relations
Mike Hsu	Chief Executive Officer
Maria Henry	Chief Financial Officer
Ali Dibadj	Bernstein
Lauren Lieberman	Barclays
Dara Mohsenian	Morgan Stanley
Wendy Nicholson	Citigroup
Bonnie Herzog	Wells Fargo
Cody Ross	Goldman Sachs
Andrea Teixeira	JPMorgan
Olivia Tong	Bank of America
Steve Strycula	UBS
Caroline Levy	Macquarie Capital
Kevin Grundy	Jefferies

Call transcript

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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 this morning'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 an audio question.

pleasure Mr. my now is to introduce It Paul Alexander.

Paul Alexander

Henry, Welcome you, us quarter second good and today everyone. and morning, to Maria Officer; earnings Executive Mike our Kimberly-Clark's CFO. Hsu, Thank are Chief our conference call. With

Maria and Here a begin the the After Mike outlook review the perspectives his results. with will quarter for will provide is second on for the that, agenda call. of our full-year. results

Q&A. will with We finish

of presentation a in today's our website. of section have We the materials Investors

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

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

And the now, Maria. over to I turn call will

Maria Henry

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

quarter. by broadly achieved we Let savings, earnings return for our with to increased growth in are And the headlines per We plan capital overall shareholders. prices. with sales continue cash selling adjusted share. driven me finally, the strong improvements to net and we Organic X% on-track margin start and cost higher

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

flat billion. in second from one point, few color fell includes period. to base with volumes in X% a up Our currency a were in Net and That five-point the while top-line minutes. just selling improved prices Mike rates. were net performance mix quarter some a our will product slightly. sales compared provide more increased $X.X X% drag even is year-ago and Organic sales

profitability. to on Moving

$XXX by $XXX XXX other inflation lower primarily than increased and gross now [indiscernible]. quarter million expect raw estimate. reduction average previous full-year $XXX to cost adjusted is X% up of basis year-on-year. The points Adjusted materials. gross million. that profit Second was our driven margin We is commodity million On XX.X%, secondarily

modest full-year. for level a last the be in higher for, are expected compared to bit year. also costs a the manufacturing costs quarter planned Other These relatively to increased we than

Moving basis particularly percent further also driven we sales. compensation. advertising the digital. more P&L, by brands, our spending G&A lines a higher That as as expense up included XX the increased, behind of in between are higher down was incentive investing points

For total The have that our have increase full-year, increased the because raised increase more and plan sales quarter to operating in outlook, we second half original About is our compensation profit. incentive of our X% earnings was results. equal of estimate. versus than we our also reflected

a high-single headwind operating in up All quarter, the by X%. all, Foreign also operating profit currencies a was in reducing were adjusted digit profit rate.

margin margin broad-based versus Second up was segments. improvements a XX quarter business XX.X%, year-ago. adjusted in basis operating That three all points included

year-on-year. up were the X% per adjusted $X.XX, On earnings share bottom-line,

benefited a In and addition share to income the profit, the bottom-line count. lower slightly higher lower a adjusted rate, from effective tax operating equity higher

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

year, restructuring versus that last up projects. driven expected supply As by is chain

friendly to ways. capital continue allocate shareholder We in

and Second quarter will amount dividends $XXX between that and to be share full-year $X.X we expect billion. repurchases million billion and totaled continue $X

cost sales margins Care Net Care, XX growth by was X% up one were at mix savings. sales prices organic driven basis in points were product The X%. volumes Personal selling and operating were each point. Personal year-on-year. up XX.X%, results, Looking improvement segment our up increased organic and and

points margins selling were mix fell improved versus XX Consumer product slightly, significant while Tissue year-ago up sales prices operating basis with Tissue, from Consumer X%. higher increased pricing. volumes XX%, and In X%. organic Net X% benefits up were

In K-C versus were basis Professional a volumes X%. and X% point Professional, operating mix K-C improved rose prior sales year. X%. [while XX prices were down points up product Selling margins grew organic of XX.X%

all, all in the invest for in results continuing we very while delivered future success. quarter to good So

call I will to now Mike. turn the over

Mike Hsu

Okay. Thanks, Maria. Good everyone. morning,

start me we the excellent made progress Let in saying second by quarter.

executing well our our We are on with XXXX a to focus strong realization margins. improve plan price

more priorities growth and are success. We in pursuing launching investing longer term innovations brands for our

return We significant continuing cash to to also are shareholders.

and growth in our just was Maria that year-ago, X% As over a three we performance delivered quarter years. while to compares the mentioned, sales this best organic second soft in

on-track. are initiatives pricing Our

and of in the Our terms increases ahead growth expectations are initiatives. price impact our from of from volumes both

We point also one consecutive continue second the to improve up for mix, quarter. which was

by Organic me better reflection of prices. highlights X% our X% America. sales top-line increased likely last in a year. X-point organic starting up is the sales compared Let share consumer X%, selling was performance. were a quarter driven products some to in Year-to-date, higher North which the in Growth decline of ongoing

and in keep Adult and on-track. to slightly going. plans on volumes Our momentum digits Volumes recently care high-single both America are that innovations up launched Poise Depend North were up pricing overall. were we

It's Delivery, action. diaper. and example Special also organic Earlier strategy uses sales Professional, this with new in K-C of priced In best of month, our X%, American super we Delivery and the premium by plant-based It's from technology initiatives. great launched comfort. pricing consumer skin elevate our materials softest our our the Huggies ultimate execution disciplined is of the North This increased made Special core premium world. a driven provides diaper. around our

consistent Argentina, of Turning to developing X.X X% organic which and growth emerging sales rose from plan. and markets, points is our with included that

digits personal by double our Brazil, organic up businesses, in In terms higher key driven were prices. selling sales care of

remain market adult are driving execution strong through and in expansion baby volumes disciplined we focused efforts sluggish, care. category growth While and wipes

compared realization targeted diapers, In In reduced price helped soft a net to China, organic promotional double-digits by last and performance sales up our were was year. more spending.

significantly. are we care, have strong year. had achieve to delivering for growth innovations on-track growth and our in Huggies premium down, we improving volumes consecutive fem launched the another were we the of are quarter the end While organic total third In mix and XX%-plus product lineup

organic continued ASEAN, about in volume volume Eastern increased rose Europe, positive with In organic sales on Huggies growth sales double-digit by Vietnam. and XX% driven diapers pricing. about XX%, strength In

reflects sales on and both and product execution, winning momentum great Huggies excellent Kotex innovation Our marketing.

Finally, in developed markets were performance sales up North outside Australia. South solid America, and with X% Korea organic in

in Beyond sales, I'm more very business. have we delivered investing encouraged with margin improvement the while our

turning Now full-year. the to

on and both are We our outlook top bottom-line. the raising

we On increasing volumes. stronger and outlook our to sales is than driven original and our by that organic plan the X%, higher one point top-line, are

On the bottom-line.

per $X.XX, favorably to earnings outlook our to that to and We are of now $X.XX of targeting compares prior adjusted $X.XX $X.XX. share

outlook reflects updated commodity reinvestment Our levels. higher improving environment strong execution, and the

true is term that all We are commodity encouraged a perspective. outlook retreated has from for remain gotten better, has high which pulp, that the from levels longer although time and especially elevated costs

significant We but the closely market activity promotion activity. commodity aren't despite will increase a we to continue expecting improved in environment, monitor competitive

in commercial are help parts our for include brands better grow Brand and We us to many of the in our and digital improve investments us success. investments position increasing business. marketing more long-term capabilities continues advertising, ROI growth to digital

is to consistent reinvesting with more model improve a while management, in creation of expect commodity some our That to commercial balanced top-line is are revenue benefits the we also Strategy invest capabilities, for growth. to we going We also which our Overall, Strategy focus bring XXXX. the XXXX. value to of outlined K-C including bottom-line K-C

summary, have in So half. progress excellent the in we made first

full-year ability our long-term, raising to value. for and are more confident in We investing create outlook shareholder our and the we are

now, And will remarks. we take prepared our concludes That glad be your questions. to

Operator

with Dibadj Thank Instructions] from [Operator you. Our question Ali Bernstein. comes first

Ali Dibadj

guys. some a try A for pretty the change, this Hey, side, flow actually. big versus cash me questions mentioned cash One sense of was capital a it year you adjust particularly reduction on in but to restructuring. year if last flow. is on even few free you Maria, planned that for free working

sense a going that flow you shouldn't worry why on looks free terms of the forward like love would us I all in and what that at side. the trajectory So trajectory, cash think of

Maria Henry

year-on-year, to be that we down slightly operating expect We still into Sure. were expecting we year said cash the coming and flow that.

higher funds. a look was at you from operations driven quarter, the capital cash taxes, of working also of by cash was If use XXX the and

So let those. both about of me talk

taxes, do to really has it with On timing. cash

the than what year XXXX, and we situation, of we have overpayment in taxes normalized part of be cash opposite. look so first an kind last were less would a the You were year at paying we This out level.

and to the in timing. cash We wouldn't in to just on and taxes. there. have so call year what is payments unusual second that out half some of going we I quarter, do with anything that catch-up this first is the has with had It make

is a there In terms of number working factors. of capital,

last strong had very that were of in XX first conversion the very you'll cash in flow paid days. by days balance, driven part benefits year, out from very in low which capital. working XX, this Part got quarter cash conversion fourth strong that what of cash higher the to we XXXX. compares a a which payables year. was was of We had And recall days Our

working the days, we of seeing and expecting terms restructuring are inventory capital In cash programs. execution and conversion our on around build we are

prepare lines, that or can down down that. our customers, close prepare stand levels are so new to close lines we seeing with and building and we we to As inventory facilities down maintain facilities service shut we and are up

the in and quarter receivable on On timing Sunday. DSO sales second the particularly differences we got a some the have collections, the or with between quarter ending accounts side,

year. I correct go through the of side receivables expect on the we as the remainder So itself would to that

there, differences finally, drag get and a to the positive, And inventory executing DSO. on to projects some and the benefits offset is timing on payables, on that team the some helping was

we will the would it's and year, bit, free be that, long second answer, stronger Ali. will still but expect for half have the So we a that flow cash down I little for

Ali Dibadj

Okay.

for me. Okay. bit improvement of A

encouraged to of will things. is, A bit question I high-single confidence in I guess to couple of start developed growth rates markets we it. answer digit X% quarter, the to ask saw sustainably Okay. and China oh type One a of pricing initially keep the better Kimberly-Clark? other emerging this and of, are markets appreciate the growing I was gosh, emerging the watching little this for see and back kind

well. Argentina little are it the I like mentioned of you X.X as well, probably hopefully China, investing marketplace that saw out seems Mike. you you Brazil helped in side. a a bit X% volume with then, points growth, as that But lot on that

return So my a emerging right on our in a Kimberly-Clark expectations hope you Could sustainable kind that on and improvement in my basis, markets. of perked expectations kind please? size that just to of of developed

Mike Hsu

Yes, Good Ali. point.

we say I it's fourth X%, it's I That overall think quarter progress. strong of making accelerated encouraged are would performance. the robust, are in D&E, say we very I and and would consecutive

think I and then year, were last of quarter the in up X% third the first X%, this we then quarter to quarter. back go X% you If X%,

we And over performance while Argentina a seeing is is a in Brazil the example, seeing little we across but from certainly chunk price impact expected. Obviously of X and points, volume markets. of many we impact improved Argentina, a mix are from about less have than piece significant the originally pricing some for volume it, of of big taken, pricing are that, we less

markets, front, would other at CE continues strong And in then, on a the grow to double-digit positive rate. say, I

are reductions or good ASEAN tiers, progress. seeing spending are way, But in obviously China by are China. encouraged a in growth, we pricing some different premium promotion and seeing volume said our growth then a and maybe, growth certainly by returning at that We double-digits, we aided very to in

Ali Dibadj

costs competition bit bit the was than and stable. like perhaps bit question, understand I that little pricing what it's less Kimberly-Clark pricing seems Okay. of GP those all Kimberly-Clark the commodity-driven pretty a ecosystem among and question of little we kind Commodity And because think doing discourse the getting investors in last in has and well. because P&G were more some little the things be of my been around that Brazil people a a SKUs a had may better of anticipated, were China is just good generally are pretty better. broader and

what has been the think that is that it's Kimberly-Clark in here we doing? sure but is are here. besides of company-specific not company savings often kind okay, challenge favor, discourse I going particular? we quite that What was Kimberly's in in like what cost is, the benefit it specifics But that Kimberly-Clark so cost savings But are happening all good. quite ecosystem's itself differentially could appreciate doing

So at that, enlighten if be Thank least you. us, that'd you could helpful. help on us

Mike Hsu

met that I Ali. is Yes, I was is demand right. environment significantly than of It's than question. of maybe think is I then. was is it the one we it our Great would And the things say healthier the when then, better certainly, toward and the think, has I big January. better than And improved, think consumer end operating performance

we impact One volume seeing elasticities of less because are reasons lower. why the is are not

fact, market across, Personal execution. elasticities are In we is, the let's analysis, to And particularly than we in really do what pretty very more products got modeled. say, I and think, It strong out as innovation Care. we the America, coming close is North new what

We have marketing as well consumption. got markets strong those improvement driving in an

team I think, think following. think there the believes haul, and in for the are think China business innovation really China and we the is, I in the long I I consumers

strong in premium are best right the so, And now. growth behind, our diaper seeing marketplace in we the tiers think, we

And is lot so going there there. a on

it's because pricing America, Latin is terrific strong really sales is at with innovation there And marketing there almost not execution. because It's if minimal volume and impact, look actually you elasticity. low double-digit

Operator

Thank you.

Our Lauren Lieberman with from comes Barclays. next question

Lauren Lieberman

Thanks. morning. Great. Good

telling, just guess to which times on go that, alluded I was step feels back markets the I emerging a two or think of in changed? how course, better is over so I operating been that following I'm Just some your kind Kimberly-Clark then the many the what be and of degree think terrific larger piece, environment as execution, mentioned to, markets, I'm at Mike, to driven specific and still standpoint, what the piece and you once onto is three So like let's it to equation a a the of change. have last curious sales it's from missing but years maybe of grabbing many you commercial would that like executions to not strong execution it because not

So could anything there further be great. you offer would

Mike Hsu

Yes, Lauren.

the buy rewind it's respond the years in of innovation a can is, innovation just see And marketing a see I tough you factors and which consumer mentioned, you get improved, free, going think, the a ago, two I think and one environment the if combination it. are to to I and has which couple operating advertising and right. when it's the think I against product of

not like is effective. So a into pouring marketplace advertising that

always But the believe I our by think where teams the benefit products or we elevating - making it. in product better premium and driving categories worth

by that is have consumers' we got innovation hold so we plenty markets and encouraged that a just that and And mentioned of I the think attention response. across I taken getting are

And when all and all then it. you obviously, behavior need, with that promotions drive in space I your and it us need, innovation, the more shelf much of get execute think close allows force we CPG know kind you have all of effectively the to good you sales

on in we focusing a So for us big have there, that lot revenue capability been building making bullet of which and progress. I big don't on, marketing, focused and the would for we magic think but sales are think areas space are Those way a I is management. is I capabilities say a all execution were we in both digital, our a there disciplined innovation,

Lauren Lieberman

marketing, the then to on perspective digital, Okay, brands? year things for to how of done new with even being now benign more at ago with out as but core to the of get look in be the who capabilities, flexibility your is with forward on Growth you Officer revenue reinvestment as backdrop have may great. investing as outlook just and thinking business, selling have we may what sort thinking months what data with there environment it commodity your And obviously XXXX, versus even particularly about tenure, thought greater your that can management, this a and the laid activities, needs about six today a Chief coming different are well you needs the suite those you sorts of of you and the

Mike Hsu

of elevating categories comes And of strategies the worth are mean in we big think I both to premiumizing kind early in development. long-term stages on I we have, near-term two categories Lauren, to of markets, by are of consumers. then core the Yes, and core is we developed our course more categories bullish the our and - that or making the which the very still very our in back

So, us expected than I of lower think maybe give little the been that the a flexibility. the we have beginning commodities the does at year,

I seen past the think, maybe operating the think so, is up I to - when the you I have more or demand year add growth than we environment, conducive think the to which healthier confidence consumer invest. that is gives us in and

about marketing it think behind sales money talked put of the more that. have I working, the more innovation part us very our January, we with and initiatives is about other - excited The which confidence we this the gives are in that back is, that, initiatives and to and

Operator

from Stanley. line on our mute. Dara your you, next Thank Mohsenian question Morgan with comes Ms. Mohsenian, may be

unmute You may ask to your question.

Dara Mohsenian

couple but at upon than in pricing higher quarters, are predicated …mid-single-digit that we a much environment commodity the today. sitting was last

commented are either you recent behind and competitors you gives in So, see And some signs from the you label in pullback? dial that significant and back with you market expect of What initial eventually? this commodity don't any forward, curious won't increase have you as look a pricing going branded seeing promotion that if confidence you to that, pickup to or branded promotion.

Mike Hsu

if the asking Hey, Dara, to I maybe can me direction I'm it, try kind going not we for. so but I will last only of you were you got answer it, of the think part push

little a more North But and for looks was pricing Right Consumer to Tissue. on-track. on-track, are the globally overall I overall they our think like. big America now, North area also focused Probably what say, would us initiatives in the I maybe America, environment related was pricing are it across on

big brands, we bit The was general we a had of seeing up I little private excess still in probably expected. pricing good still planned. in not has the moved, but growth our was think volume label difference and are from we what as

think, is had promotional It's a it, multi-year very at level. seen competitive point, have expect issue highs. high us, I pricing. uptick this inflation at Don't a still record and an maybe this we in commodity at mostly because have for not we

And promotion planning have plans are we don't not us, high so, - intensity. our for

We the innovation that are the have, we marketing really on and driving focused advertising.

looking were else? there, what will maybe something or and pause I you that is for

Dara Mohsenian

And helpful. American gap second the pretty is North the particularly performance or to results very helpful. a scanner is you of club it I an and subject, there That basis update between bit question, with And us innovations widened Yes. looked the significantly reported on strong in while your market and a that U.S. then, points. growth give in just mentioned, some could slip the of hundred more if a there? data sales on e-commerce we that That'd Was you inventory that function retail, share build a few are channel growth? just untracked maybe channel, like can the be

Mike Hsu

there. little different a Yes,

commentary did for maybe was is differences, I indication a is you where measured. non-measured We probably - at look our That the best generally X%. better have year-to-date, our a of think think the than stronger is few now. we what plus certainly us X% if said right we in are probably business that we plus

a some that thing is refrain, in So ways. ongoing good an and

our still we dialing back I affected that question, back are intensity. dialing we revenue your to promotion are changes recognize realization. - spending some had we Also still net prior

of that affected a some but lot had have changes, in those And inventory minor it. so we we then retail quarters. And did

Dara Mohsenian

Thanks. Okay. That helpful. is

Operator

Thank you.

with Wendy from Our next comes question Citigroup. Nicholson

Wendy Nicholson

that America the my Hi. Good in caught high number volumes that comment single was just in Personal was eye, a digits which were up in Care morning. There North one, commentary obviously I very know what been for because high it's care. under was pressure. a And that that drove that adult I margin is area area been but you, curious is an

down follow-up was successful. plans there? I to And is ago volumes, is to did Thanks. in I'm digits - more North similarly, you in promotion I plan plans in care growth that? get are there it mean, on that fem again? you your growing So so or or is that mid-single been And fem few years any not volumes that Are What category innovation Kotex a pricing. know then, America. the that What it's for restates really your business a focused doing? care

Mike Hsu

Yes.

adult progress are on Wendy, digit. We making care, high-single up

up our last category - launched it's somewhere about really I that that and messaging, enhancements are think Definitely gaining probably product we I and traction, think gaining that range, about single-digit sizing. the category discrete for mid traction in is year is category-building innovation messaging us.

Poise got and pretty going well and those are for Fit-Flex out Depend is We now, on Active, all then working have us.

category-building. And brand then, strong that we more messaging got is and have more investment

working I think two great that those So fem care. things it's the are of care, in In adult category. a

We global we focused great franchise. improving team need and messaging. performance a our and the on the brand got to the the of product have We know is U.S., in strengthen enhancements

Wendy Nicholson

It's Perfect. you just last commodity Then a benefit like comment going pricing favorable long companies on pricing generally, back time usually favorable opposite. impact. to Those the remember been can't of got time. work I and just your the

And get have where the think Why strike not the back that rolling what taken, you point if do you the I commodity cycle hope a surprise. the to a calendar I you increases have you so, know you in be is you toward as struggling the market point pricing just as categories as expect still share where 'XX, promotional But there, at taken, to said me some current aggressor Thanks. but that the which, may need perspective. particularly in of you contemplate you from are you to a will? be price would you don't look case, increase, that environment, levels about

Mike Hsu

you a I like you have memory phone, the side this an elephant. on think, of Yes, sit if

or our million year, $XXX was plan. than I $XXX more inflation last So, commodity think million our

close a year, to And not favorable but so, it's even this more that. little

behavior multi-year margins. I a to And driving impact so, again as our and recover commodity that as I impact, is work is the we think said,

is seeing the I healthy. are retail demand right consumer environment in now, And we think,

and value-added grow I this our a marketing, and more responsive to could driving of and consumers innovation environment, think, versus us that is promotion. a categories more in cycle think for the I bit doom be competitors to

Wendy Nicholson

Fair very much. enough. Thanks

Operator

you. Thank

Our with comes Fargo. Wells from next question Bonnie Herzog

Bonnie Herzog

which your category actually key follow-on on channel private-label Alright. as I Thank a in has had largely you. such track remained question Good unchanged diapers. of morning. some pricing,

want just from how from you label pricing some are seeing not private to So, you offerings? hear comment with competitive are whether separately, with stepped-up guys their your you And on retail moves. pressures follow partners private to then, you any could choosing concerned label of your online own

Mike Hsu

Yes.

promotional we We we role our volume-sensitive are of but make label sharp hasn't the nature pretty so this to feel very or category and have or on. sure well fine-tune closely. very Scott we notably good XXXX, get volumes do our manage business, And Consumer product in responsibly. to about to brands the - our we moved it's the yet. the think private despite so Tissue that while Obviously are a iconic are I enhancements category new in speaks need, that are we with a Cottonelle, and eye going we our keep direction, diapers I got plans that that think something may we performing Bath watching the our specifically in pricing that. advertising the It in category,

Bonnie Herzog

from And market? understand under that just second to so a just then further. down it still on wanted to a seems And Thanks. China. be for me like on improves you pressure, volumes when your positive just in Could seem question that turn or drill little you see we can Alright. performance further

Mike Hsu

that our investment OK. the in right Yes, And direction, feel short-term breakthrough, we working Diapers right Fem diaper market, the our the market our in best is I China, opportunity we Organic contributions gains. think Care. XD double-digits making we have now. best with opportunity, fueling of middle biggest in the which toward that the last the really launched up call, long-term like and - and from think is of a big and biggest In the the diaper the what and we Diapers, we year, is was team in both innovation. is and end

tiers, managing value We are are through significantly that. in bit down the a up but premium the in we still tiers,

is Some price or dial points promotional conscious have promotional points. to our of back raise that because price chosen the we

of that the the very price premium, little And we in in bit in are which value some is so to would drove a are category. and that us, But net still important that growing the had realization tiers. I declining say, the we tiers Bonnie?

Bonnie Herzog

Thank you.

Operator

you. Thank

Our with question Sachs. from comes next Goldman English Jason

Cody Ross

years. markets led that or market do growth you categories which And And is sustainable you Good are details actually first it are this Cody surprise in? and Developing on is? many the This the taking? price, us tell morning, time much but How and us Personal share everybody. gain was think in Perhaps most the Jason. growth seeing Care. more America a could fleeting, sales end-market had X% compared to biggest how balanced to quarter is for was organic ago? your for a share what emerging North in you two what were by is driving Can which specifically? think contribution provide What be think the you you do you

Mike Hsu

Cody. point, good Yes,

pleased in are North growth nature Personal think America I we very of balanced the with Care. the

strong and I our think in innovation that organic product us. was up was up that execution. and strong reflects, price really balanced volume for and X%, between mind, end-market really X% in X% being And in

And got protection. - really a to lot just if launched out, comfort. Huggies Special skin going diaper is just you'll launched of it's which got great indulge we ultimate Diapers, In innovation delivers deliver Delivery, And and me, we features. trusted coming we our softest

of other skin. and parabens materials, chemicals, plant-based and for got harsh free baby's It's hypoallergenic

designs at Cody, example that a great action. and a is strategy a it's a product, in really our great good elevate-the-core good got it's a So significant And And priced indicator or premium. been - packaging. of it's

So we that. are excited about

got, we product market. just working are as In Depend in are working number - those of I have those care, mentioned well a likewise earlier, all adult in enhancements both the Poise, and and

Cody Ross

and spend revised what costs. question higher Great. you we just outlook? from reinvesting What G&A And Thank savings your initiatives? is spending you increase behind? expect that to your you. about it other have products provide My When should spending also, details guidance then it more to was marketing a the calls Was hit? for your outlook? Can it caused commodity just you lower

Mike Hsu

certainly it's consumer from but some confidence also, and environment, Cody, to the thus in the gives invest things. the gives then, a said, think I returns it's One, outlook further. our piece to think, operating conditions us it, couple given date, us a and marketing confidence that I of of the to had far improving of the robustness early Yes, the invest. And innovation our demand more

the mentioned is for working - has big So area strong of driving lot is one areas, us think a ROIs, areas. effectively a big It that I in for Digital Maria us lot got parts Tissue. and business, digital Russia, direct the Diapers markets. would marketing we of China, of multiple what Care Fem, in I have call North think Personal our in we America

outlined, a from end-market the accelerate execution in I tools initiatives. growth capabilities and then, And our to revenue of process investing that management are capability including and perspective, people, we some our also

Cody Ross

should in your hit if had far one can sneak to commodities $XXX cost strong just guys of range million million still for million housekeeping savings should so Thank $XXX below Great. million, outlook year-to-date. about you. to expect And savings? in to come $XXX item, $XXX have Even if target I you you that we

Maria Henry

to to on What of bit delivering we be composition $XXX savings different million say a tracking well what the is this were thinking. the million are We I may that $XXX than our year. would way

manufacturing cost Our are work as and FORCE they cost savings to deliver reductions our delivering teams solid operations. in productivity

than coming FORCE a $XXX deliver our program that end come may think we in are to $XXX bit But better and of combined on the that. the At restructuring light, may to very in for it's the into had possible Our savings in year our total, on restructuring we well our on-track. year. million anticipated day, savings the come savings, way a much million I bit is the

Cody Ross

you much. it Thank along. very Great. pass will I

Operator

you. Thank

next JPMorgan. with comes Andrea Teixeira question Our from

Andrea Teixeira

So are How morning. Good I you. two Thank questions. you? have

see anticipated. we prices? the more I prices commodities, you to pulp have assuming than First rolling by guidance, over on the are Maria, guess, should for new what spot And been

you the the timing in being should outlook, of don't guidance because levels we these bigger prices? finally progress you and the lower have these visibility as is and revised of in a conservative contracts on having effect, guidance it's impact for said like your probably So, long year a this and to linger multi-year we the see as going how

second And is about the question China. then,

So, quarter. an you have impressive

to increase finally is tier marketing So segment spite you. these seeing alluded premium near marketing and is to the for stores? sustained of in than you more are in are being decline, segment that spend online you the the baby fast-growing or you Thank or channels, offset able it more that including the

Maria Henry

we a commodity than just inflationary, with commodities in commodities that tune level of to expected. lowest bit about XX% the start a a the I while inflation that in don't in guess, have the and it the But And years. seen they reminder did said, come I were on a that is outlook. better two were Why us in of inflationary to Alright. impact quarter we good was profit. quarter, on still they start operating place second headwind the for our

Latin particularly on high. So costs no materials North change Distribution to we the inflation resin-based North also continuing and on continue as is outside all with to see America. they that. of high. in do run of our plan There Costs mostly We do but pleased still are run results these pulp as view that, in fiber some versus of America, our are in well America.

the contracts question annually. around general contracts, your negotiated are in the On

remind the January. negotiations coming XXXX got call when discussed got on out I'm when of we we that - had the XXXX out of we you coming we in will sorry, that I So

So we where we commodities next and nothing out discussions have that, get calendar for the have new are to to set we suppliers on as report year. will year close land and into where contracts we and our with our and see we

that of all We January. will on in lands you where update

the are which I spot with general, assumes other thing a forecast would move from relatively then, bit that, down commodity on that And is except here. our costs the prices, comment for recent outlook to is further for consistent in pulp,

commodities. what is is kind with on going So of that

Mike Hsu

And through sustainable? marketplace. do And I the long-term the are what driving the our I the then to sustainable tell I progress is doing taking. will really Andrea, by by it's on think intent. that Yes, is Their we think, we be team OK. that seems is, encouraged effectively we growth. and believe you way are to China, that the category is elevate product is innovation in working very strategy

launched category, any marketplace in that except middle out XD toward the got perspective. as year, last the it that a while in other at the the better least diaper breathable that diaper soft protects end last product we the that the year, that is winning differences as is there it's than have much products our of and flexible, of is and We

that volume It's premium getting down was just just significantly in traction because growing the it some is changes. premium side was of volume But net tiers. said, our so and the the was organic the that of of in differences pricing And be in the clear, in quarter. to also That because diapers up business.

I So heading to the We is is that in growth. the the right long-term drive think are business doing think work we sustainable direction.

Andrea Teixeira

That helpful. is

in assumption are bridge set revised the one Maria, embedded on kind understand was follow-up us your I of suppliers, year a year, the of This now is what Just you hit. contracts can with obviously to so with for pulp guidance? big last year your because kind

Paul Alexander

commodities. no Paul. forecast would in been is this general, Andrea, there in how say, has change we I

the so they with you are what then would using we including forecasters generally forecast. up are well, And RECY that line and we doing

Andrea Teixeira

the because can't should assuming your right? they're it timing of now, we right? but think? You the of embed they can't way roll, spot the have I'm the contracts, the contracts. that don't significantly you And contracts that prices because include lower Is rollover your way

Maria Henry

we for inflation we contracts One the We affect you Kimberly-Clark. commodity both one affect report got prices, as then that that and and market obviously with you we don't. discussed, things also what have have the as other us, have into, have visibility

Andrea Teixeira

pulp you not us But us you Yes. at give the this you gave are in ready the point? the where of Correct. exactly as did price past to

Maria Henry

commodity? us to metric is after our would we have reduced to ton. on $XX of is side, say are fiber ton, which that are $X,XXX down major What I eucalyptus, you what that, per is the outlook terms for we in If input on range and thinking fiber our a metric $X,XXX per

Operator

Thank you.

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

Olivia Tong

some pricing the questions Clearly that first given But some question. mix helping when you. spend your Thank volume? initiatives and Obviously, a actually is around brand initiatives. there. improvement support is few in commentary that you initiatives, these Great. drive of expect your do to So

of a about little message then to terms bit as done up new Huggies obviously just different And around a shelf. the Delivery. it Special went what it marketing conveying thought around the dramatically how the both and process have versus the you and competitors past more in Curious very you in second, because your the stands and it's on very

So there a would color bit more you. helpful. Thank little be

Mike Hsu

Yes.

essentially piece the been I the the you I example talk The teens, maybe give maybe think pricing is has working up the about is I a gives you reason bit if and is, think Olivia, it us than half. back investment, sale, little flat. increase the volume in of overall brand is to it Brazil, that confidence will in the a investment On why the less

lot we our volume taken hold, better that the modeled, on that is elasticity would've which than have while has is, other And elasticity a of things but going the what make so, innovation. assessment got

then, got spend care baby growth, advertising growth improved advertising wipes adult and marketing getting initiatives or increased And initiatives. on behind that diaper the very, on is and very have We strong those products.

part why the more example, have kind to seen have I spend reason we think just confidence think it's we I So, of more. but one of that and

Paul Alexander

Special Delivery, Mike? And on then

Mike Hsu

Special about excited very we Yes, are that. Delivery,

You hands Very look contemporary - can business. a on and some definitely feel. maybe different see the

have a technology kind a it mom with, young from maybe well showcase of enhanced in millennial We technology globally great from an terrific, perspective. is team is tune would partnership got I The on approach tested. say, I very us, a and of, that which is it's a think,

China, all softness, Olivia? that which and America, this lot been about it of product takes it Latin make have America, the North the are obviously a plant-based mean, worked doing excited in the liner, free designs. I of and and the team what features Korea best very more to is skin then protection, consumer the attractive to together forms it has standout launch and we we

Olivia Tong

on Sorry, I mute. was

all far? fill for Special shelf any time quarter? And color on at been short pipeline know on feedback on early up Delivery, in following Just I a only so did Huggies the retailer help it's but

Mike Hsu

is huge But are say early, a I so - the probably we there wouldn't then was still Yes, it's and still little been response again of the pipeline, relatively bit has quarter. very retailer relatively pipeline positive. in

very they're excited I product expectations in for the look Delivery. quality and the obviously think about a so Special got

are about excited it. We

Operator

Thank you.

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

Steve Powers

you Hey, great. both. Thank

now quick do we idea we XXXX. year Is expectation on level trend? where have that Maria, or in from deflation into pulp. expected your a heard of well later tightening follow-up where view others from by an the Just in you are underlying have on the commodities the some the of near-term and as followed alternative

Mike Hsu

with consistent and Steve. be would saying, what see That we

Steve Powers

Okay.

Mike Hsu

early we about too for same little those but see a It's to XXXX us forecast. talk

Steve Powers

Okay.

the to be fair clear, it's process? planning of assume that Just to sort in embedded

Mike Hsu

Yes.

Maria Henry

Yes.

Steve Powers

as for Mike, like in India markets being the past, assertive position a are company Kimberly-Clark How about the types leading-edge rank initiatives investments assertive industry another And the great. benefits then, marketing counter of about with a processes have year comp in for also maybe do level tools of a some you the But it's and you been competitive on action future more presumed ROIs bit investment position the costs. you beyond talked the better like people, thinking of further called It opportunity to dollars? Alright, you I incentive from we and seeing those in long-term to growth. and making the reinvestments above in some Where forward, maybe sounds make have in investments going out. terms guess, mostly for Okay. that prioritization follow-up in are and just more the that?

Mike Hsu

of the earlier, conditions more I what more Great investments, or category and so capability multiple is around some seeing are think, question, is that over six digital obviously, current months think, going markets. I revenue And Steve. building second I execution. investment about Yes. think are the I Most worthwhile management as and talking into and the we we that of sales for growth mentioned past the is productive, changed make across or half

but say, do believe areas, our and great markets those like enhance categories, India. care investment we adult let's the So near-term we globally, opportunity in are and focus wipes, to have baby then

And to got of good through we accelerate growth. as lot into have those team, think invest a opportunities and so, a I working and

Steve Powers

I pass Thanks. on. it Okay. will

Mike Hsu

Thanks, Steve.

Operator

you. Thank

from comes with question Steve next UBS. Our Strycula

Steve Strycula

on a good Hi. quarter. execution Good and morning congrats

Mike Hsu

Thanks, Steve.

Steve Strycula

So, a few quick questions.

that. you a think For other I versus bit year. Maria, companies heard to tracking of driving it? the the were you of I be start I little is What haven't that on to say manufacturing higher expected really than speak heard lot going a expenses

Maria Henry

when of write-offs we this for costs is or other general include investments start-up It's labor equipment. hit not call a year. absorption, us, in changes higher that manufacturing such which manufacturing items it is came and one-time what types are is product improvement bit as expected the running that an and unusual of There number new us fixed inflation, Sure. cost area like expenses into but rate that we affect impacts we They with things inflationary costs, associated operations. other than our a

all Specifically, affects those With we out quality Latin on behind our off fixed through innovation which being increased area impact. product have there we that there. second where the one of investing flowed our increases cost about we leads been cost bit, talking America labor in investing talked quarter, has are seeing we that across for to And innovations product inflation those item. the saw and a that of improvement and question particularly is in absorption then, are a levers. line all the we And are rates, improvements one which the We investments about. in area volumes investment,

two on is of to fixed cost the there. So investments as drivers. And in point absorption going the product that would what under I is the

Steve Strycula

shareholders. percentage reduction to about Okay. or about the that feels of And outlook. third as million flowing through it a you follow That up is to to to $X.XX that, think we like initial points to about And earnings are dollars. EBIT a your inflation $XXX X if

think So marketplace, we things now is just about Mike, that that wish in really this - or the including list this are that there the just a and good to conservatism we have bonuses right is increasing you as opportunity not on is the back of address it, actionable why half? out

Mike Hsu

- for Yes, the good a I third to was think, it mean, I going be mass think the health is through for and market it's long-term we responding, that of The I business. a between somewhere you to to flown between of are think know, I part opportunity are half. conditions our and But again, productive brands the us invest.

And what that. we is are so doing that

just more but is comp up. cutting formulaic. stuff Last year the we and of formula back it goes a Some it's year, this math comp were

or - in the So both, and the for really is and capability in the Maria marketing about us of as reinvestment in but then in built. said, brand the digital focus some products spending

Maria Henry

Yes.

would more it flowing two-thirds bit compensation aside, took if like you look through. think a I

Steve Strycula

on high the more can texture is little Okay. and of as on walk as Can Mike, you constant happening markets? us give China? those geographies the of few level at just Argentina bit touch key what in on few us to to them, out, currency to basis close And just you a is what happening a through a a across Brazil,

Mike Hsu

solid Very growth. Yes.

growth overall expected up Volume almost digit The or down competitors and been lagging. generally in I double is the market although even. price really I related has price great Brazil, than better the execution. mix local slightly, teens. think say, Brazil, moved, would some net were in in have about performance to think, selling was I Overall expected volume

working And is it's marketing the selling. all us. it ball execution, meaning things innovation, whole and then say I of wax, when those are well for the it's the the it's And

and have year. like plans wipes paying expand I we care think market In in is adult Latin and categories broadly, in kind this addition, or more that the to America off Brazil a got of developed very

in double I volume say, Argentina, I mid single I decline digit would the, was level. organic digit The think, guess, high growth.

could you has consumer of - could think the expectations you the the So from again, of that kind their strong execution it would price, have impact pricing. but reduce of expected is you I market up for that the teams of reset very which volume thing, end level same kind also chalk to

is Ukraine bit XX% from revenue Latin although a at perspective. to good up XX%, Russia very us, very and little pace over very strong little for will refrain a pressure we couple have thing, tell it'll marketing greater up So, the also Europe America, grow double performance you, and than our almost CIS. execution. over performance in Eastern Central strong prior continues a under share But I more be ASEAN, digits. are experienced in-market and there there or same of years. the formula innovation, bit

markets. most So we are feeling good about of D&E

Steve Strycula

thank you. Great,

Mike Hsu

Stephen. Thanks,

Operator

you. Thank

Our comes with next Levy question Capital. Caroline Macquarie from

Caroline Levy

have about the one for and Thank fun Are bedrooms surprised pink which you much. I very talk morning. first, longer Good So black logic if package. is, was just doing babies, stuff? could you black their and to so a blue I of behind a diaper no kind families young packaging? see

Mike Hsu

hands Yes, got I Caroline, have on interesting, the new Yes. was some we saying business.

I black it. have Obviously, of category strong looking black diaper is tell and the is in for team for fem care off kind packaging while what black in response the packaging attuned shelf. will of millennial you, It have The a is kind striking retailer to category. the that been is first with in mom we the us the think I the for. we category. gotten

would And far doing returns job, say, got is it's a it's seems And though even striking which to it's would the millennial and it's are I it impression. more trying it's direction. it's mom, shelf. think I so great it its think early So, to too and I far feel. And shelf address But really say. early say look right like contemporary we I heading a overall, so in

Caroline Levy

you. Thank Excellent.

maybe you about talking are remember a rates. just a I Korea. mean, year-ago shocking birth So in I decline to I South wanted talk

going you and in your declines. about and seeing put - yet birth up North able North America. on as despite America you reading trend? long-term that with you are deal And really a some of do is think rate do some how good to in Sydney We What are numbers that

Mike Hsu

decline, recall. little numbers that a a Still maybe Yes. may than you the shocking less

it think I of decline. low years a digit Korea, South a was ago, double couple

think I this digit. single it year a about like high maybe looks

improvement, that marriages slower down. but it's an still So in the Korea driver is down. are And formation. in South family I still is fact, mean,

- when South down but X%. in our Korea that XXXX are So, about about has it's rate improved, America I similar think, estimates still birth down North that is and

think, seeing address. big markets, think so, a And that why And are is that things of Special Huggies with. Delivery have in to we is deal trying trend I the we I some developed you that or to are

are the big we core, you that in category. the a which the work driving, And reason And way But them Special and which is trying in are The sells line significant more with products have premiumization are that we really to got, paying for. pretty to a drive strategy grow - to of markets, you at all Delivery big good premium about thing the it about do. products make and is consumers and in the work only worth what elevate well other benefits way the for make is, the tested, if developed premium feel is we falls got lot looking to it's premiumization. is that it's is to that that, the

Caroline Levy

quite just mean, haven't price bit of have that there increases. But the I that Thank talked you. And dynamics competitor I a fact you to retailers Can change regional to about manufacturers costs as think different? you Excellent. as seen Amazon, fear history. pushback. And compete come to the anything around you you and with try this continue back. seeing back they just down come that? may is address Are the is push

Mike Hsu

I that are know different. seeing we don't anything

dealing Caroline, us for issue, a ongoing one also industry. time long that been for the that a is long it's who've But around been time. of those think an have in I with

growth. dynamic with, we through it. most deal mostly used retailers this I they're will so interested managing are like driving and And to in that say, we

And pricing or retailers, do some they like growth. may some categories so, like while not they in

them with focused right that the on are partnering the working so on way And to is category. where we grow and

Caroline Levy

just volume K-C is X%. And you Can Professional, on it. last Western there? your just what Central Got on my to one, Europe was talk down going

Mike Hsu

quarter X% were biggest driver in would was organic and say American X%. KCP in up overall markets K-C solid The I North up for another Yes. Professional emerging developing in

I biggest is think in we leading is going us competitively with move position are in, there leadership right little some this feel you we followed, but the not price markets thing a for volume is KCP have stickiness and be the know, we as to all our recognize generally, and impacts. like

Caroline Levy

that think is So you temporary?

Mike Hsu

temporary, will with of kind if deal but we Yes. prepared through we are we it's Well, that work as something see the to year. it's

Paul Alexander

you down and the to what I market. if in mix price think X%. that is, developed we on do that would were of about markets, net volume, especially that add And I Caroline, focused across

Caroline Levy

you so it, Got much. thank

Operator

Thank you.

Kevin Grundy Our question next Jefferies. with from comes

Kevin Grundy

question beat Mike, differently. congrats but good result this on ask little a the reinvestment a to Hey, I wanted Not horse, on quarter. to the everyone. morning, bit Good a dead

So been years. when have not three course, context, results over you hoped company's of the have past the

year. not still as share the half suspect like of this good so at quite even, in look of first where I hope. U.S. Mike, market would So trends, Nielsen you far we the But data

arguably of is that of is around in prices shareholders we when you the was, going justifying with sort how see the the any going be is reinvestment So was thinking were the the question upside the innovation working earnings drive to early necessarily to the thought do are So over you for pulp top-line, reset thinking and about didn't to pipeline the as try not of there of were because met with all how progressing, any thinking it. to most the to question business going the the the over really to what value you and year, the investing adequacy about time? sustain sort you quarter through rolling which is you is, guidance because

but bit, you a and the going I through. flow So, it's then, sorry with the have the of adequacy for around And saw reinvestment follow balancing on that as up. it really earnings one

Mike Hsu

share to part Yes. is if glad the improve have lot need or on we our behind price and one bit results, and Kevin, area Part price I'm is to are. on. really we in categories. on markets of are And a that there focus one quarter first is little expectations of related mover being that. that what is a leading our our we really toward That of raised you got

And impact some due to that. share so, expecting in were ways we some

shore also why up we reason to share positions drive it's healthy a for long-term. wanted our are reinvestment and However, big make to the sure this here we

are going this we is creation that laid example that. we balanced I think out on of to think And deliver strategy value we our Casey plan. an that our XXXX

Kevin Grundy

current we to that And the Mike, still in should picked course here can behind of of emphasis leave Kimberly, the then on with that I has change. bit the was, environment. in the not expect space, not in M&A been sort personal to M&A tuck And and just I front care, I of your a should probably really largely course, active much guess. past. earlier the shareholders? wanted business in think kind revisit commentary returning of we expect course, sort particularly a separately, Is investment I Okay. cash on skin Alright. guys, an of of Fair that, HPC up enough, you care. very in the

Mike Hsu

there categories. the what year. potential versus significant expect our a lot in think think to don't categories we a to I categories, grow you in we like would mean, of Yes, our elevate also when I both growth at change told especially We opportunity earlier we is D&E. still our you this look and

continue do consistently. However, we going that at we are to opportunities and to look

may at opportunities it always is development very active for we a appear got us. not be, but have We looking that and - a got have team to M&A

Kevin Grundy

and to on areas specific just geographies? care you would or what Mike, comment

Mike Hsu

I Maybe will now, for pass Kevin.

Kevin Grundy

Okay. Thank I Alright. Good try. you. thought I would luck.

Operator

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

Paul Alexander

support we you appreciate and from We our much. shareholders. speak Alright. quarter. And will today the Thank to next thanks questions everyone's very with you Bye-bye.

Operator

that this morning’s and you. presentation. Thank gentlemen Ladies concludes

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

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