KMB - Earnings call transcript Q4 2019 | Kimberly-Clark Corporation

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Operator

Ladies and gentlemen, thank you for your patience and holding. We now have our 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 today's my presenter, now is to first introduce Mr. It Alexander. Paul

Paul Alexander

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

agenda perspectives call. Maria the XXXX. and outlook on review our with will will Mike our XXXX for year results full results. for then is begin a Here of provide his the

will We as Q&A. usual finish with

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

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

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

over I Maria. to the turn Now, will call

Maria Henry

Paul morning Thanks, good and Thanks for today. us joining everyone.

headlines increased achieved higher full-year our start our results. returned we with me brand margin investments improvements sales shareholders. strong selling the net growth and to efficiency bottom and Organic while Let significant and capital line by increasing on prices. driven improved X% cash We

with Now a from $XX.X of details cover results Full Organic sales and our rates. were currency let's net year three X%. sales billion, starting year-on-year the even drag that's sales. included point up were

driven Professional with prices product America, Care grew up America X%. X% sales in Tissue KC in in at Personal selling sales prices major in volumes, organic mix. Looking higher X%, grew categories. products organic volumes geography, X% consumer X%. all top North line North down with increased that the increased Within pricing In by X% by and Consumer positive and

X% organic points and sales about that developing X.X In markets, included emerging Argentina. from rose

XX% Europe the particularly results volatility and of of ASEAN. in second we terms the key high year increased Latin and in Brazil, Bolivia organic America, and in in Brazil in increased and Personal Care and soft Outside China, single-digits Peru, Eastern of Argentina, sales In markets, experienced half Chile.

America, X%. organic developed outside In sales North of rose markets

Moving XXX and Adjusted on right in line million profit target generated adjusted expected programs savings full with FORCE our margin that gross year-on-year. We increased points $XXX was and XX% X%. better up profitability, in from gross restructuring year of our than October. to was slightly initial cost basis we

$XXX of For million XXXX drag total cost the in to half we're favorable of in $XXX and Commodities turned back a $XXX to to year. that FORCE. savings million targeting $XXX $XXX million they XXXX, between deliver the million from includes in were although

reducing Foreign also a currencies headwind were a high-single digit operating profit at rate.

For in higher commodities in by somewhat XXXX expect XXXX. manufacturing particularly Latin offset headwinds, Other favorable costs we America. currency mostly were be will also

That was Moving increased percent higher and as sales. building capability which further down XX along P&L, spending points of with basis higher was basis spending, included a incentive SG&A investments. points. up advertising XX the up between-the-line included spending also compensation

and Operating secondarily nicely basis Adjusted operating three business were Tissue by led in XX up XX.X%, segments, all points KC margins operating margin adjusted profit X%. grew up Consumer and Professional. was

$X.XX plan drag full total, effective count. adjusted adjusted by a income line per year-on-year, The year equity was earnings offset share In a tax with share higher rate lower X%. and in and were partially up

of original of last outlook Our our $X.XX October to and $X.XX. earnings was guidance was to for $X.XX earnings January $X.XX for

capital and expected $X.X to cash was flow efficiency. as higher provided working capital. down operations turn by Cash year-on-year driven let's by Now and billion

will due in our driven restructuring flow with by cash We remain Capital restructuring. projects. of chain to and XXXX this was elevated billion year, solid increase higher in $X.X Spending spending plan earnings. line year-on-year in XXXX a expect in up because supply

allocation, capital shareholders. which returned XX.X% capital billion return year that's on to high. adjusted repurchases least consecutive dividends at $X.X and totaled by is we've share XX basis to improved points an $X invested the On We billion, all-time ninth

return annual dividend cash approved in of already a increase. We Board consecutive expect similar to to level shareholders XXXX XXth our our and has

finish our the the we've organization Overall, on program. restructuring with program. our we close redesigned implementation of SG&A progress already significant as year a program savings. short realized we've second me well very Let of The most update out gone has this overhead made of and total

expect announced twice to In of of terms to up. facilities that level which approximately we globally, ramp activities XX of a XX sell new on start continue we chain, we've In those. approximately year. taken X in that and have would roughly is the X up action assets close We've of supply or XXXX will the typical we activity

to XX% XX% XXXX $XXX Looking million savings target our workforce by to complete charges about $XXX savings to generated XXXX. the and key and at on XX% end compared metrics, million so we've of pre-tax through saving program are and way reductions. the about accelerated of of in XXXX of $XXX total Cash we're and payments million both far we the

overall, while So line in top year invested I'm growth it we bottom we pleased delivered that more ahead business for the good a long was of and term. the and very our plan,

turn With that, to I'll Mike. over call the

Mike Hsu

Thank Good you, morning, Maria. everyone.

by first encouraged Let strategy XXXX. the saying, start made of me results by K-C we year I and our in progress executing am the

in were On growth. the X% original 'XX organic up X% for top our of plan ahead sales line

Our and team focus has maintained well executed on their throughout year. strong the realization plans price

realization achieved necessary was pricing and that's faced. result, X% of the inflation was it and the because up a we we've a decade multi-year that highest in As

helped drive Our trade mix also strategy improve one by us product point. is our to elevate and categories up

of X% end were brand price expectation and strong than execution, our higher investment increases. because better impact less original from was While market down that volumes

broad we delivered improvements and sales, Beyond based above plan earnings. margin

savings, cash our discipline we return improved leverage shareholders. to continue cost We ROIC financial capital and as significant achieve to significant and

in businesses XXXX. in and invested also more We our brands

deploy target working quickly. more of it's mix As Maria us two-thirds is by we basis our advertising and and Digital campaigns our noted, media XX helping spending increased effectively more about advertising points. now consumers

our businesses more digital the leveraging marketing our around ROI expertise improving. and is world and We're

internationally, our America. digital and Adult Importantly, in is Fem Europe grow in North Diapers Care Eastern like us in and strategy helping volumes Care businesses

beyond advertising, better to capabilities, tools, more this program we've and revenue We're This to and commercial resources making capabilities. including a sure we processes improving focus management Now management. approach includes growth behind started have disciplined right effort. invest other our can taking also the we these so leverage on

All making And our progress early still in I all, I'm expect going their in it's have we're more made accomplishments. teams forward. excellent While XXXX. progress good of days, proud and

for to XXXX. turn I'll our outlook Now

our aligns with financial growth and our to is plan approach consistent strategy XXXX balanced K-C higher Our with creation objectives. value includes investments

targeting growth topline, and and similar we're the for of expectation On growth. objective our that's medium-term organic category our sales X% consistent with to

product will more volumes back be to XXXX. to prices, selling volume likely weighted We weighted front half the while and all in the half. expect Pricing be year, improve for growth of mix should the

We but expect be to the promotion remain environment constructive. broadly competitive

We in our will capabilities that as marketing, includes our commercial and investment in and investment innovation products continue to increase in our part in digital growth agenda. our XXXX of

in year investments innovations in America. our we time. such and tissue. help and along and several Huggies, coming share In will confident as growth have diapers D&E, us China, will over Europe innovations bathroom Eastern We're improve and and In on North mix volume improve grow personal in America launch Latin upgrades performance this key we product adult care Cottonelle in care the first markets half,

implies should away investments that X% year benefit and than grow Our average, first should quarter of XX operating on X% will margin start more adjusted to increase Gross build that. profit while margin the We're the points our in to right as expansion. targeting the progresses. operating basis

earnings with XXXX the line, On our that K-C strategy X% XXX share objective. we're bottom At line per midpoint, to targeting the of of in growth represents adjusted XXX.

Mario cash flow of improve return said cash we to as Finally, significant expect and amounts shareholders. to

for our shareholder So and I success and confident in business We're sustainable more summary, progress the long-term create deliver in outlook by value. to to am drive we're XXXX. investing growth in in balanced and our and XXXX ability encouraged our

your remarks we'd happy that concludes prepared take Now our to now and questions. be

Operator

Lauren Barclays. [Operator with Lieberman come question Instructions] first Our from will

Lauren Lieberman

thing that's first company's largest increase struck far. that I and back in in spending that which history the to I'm in advertising goes the back increase by point the XX my goes dare one-year model XXXX, say guess, is basis advertising I

coupled had of that you year, million into ahead spend. looking implied incremental then with and quarter the $XXX fact next reinvestment that fourth SG&A So in the the

up you it's in you'd under-invested the benign So spend, you fact you've where step year plans of can just we're requires that talk like the but there feel are contemplate a that areas company some like a by ago laid much seeing. cost this a it's input environment, that that the out supported being it deflation didn't about as been

it focused because revenue a of aggregate the amount say like kind to into in, to the takes just you see doesn't start that's with business? the most tie the for going I'm money of healthy what would that on going it's amount where So while seem curious to that's XXXX back back and guidance return

Mike Hsu

trimmed of of a of we a years, there a had had say, Yes, A&CP. back part bit which there and it is maybe little we small a think - it, I is so part of tough hey, couple

in view, it So in about I part programming commercial our investment, you that that tell the for the part, year. our we good we is on other bit of stance feel think But restoring of have really that. would quality reflects, a is, I this our and really

last I growth marketplace launching big this commercial still think when and time think uncertain very also conditions to about that we we that's program. category think the the and new innovations change new And and we versus are I conducive fact were a talked where year the we were

really good about we feel that. So

- across got demand makes we darn Diapers. in got in Adult commercial environment think And and great coming innovation we've good Personal conditions so that has that that in pretty we're in launched excited support. the then the Care, innovation markets - competitive pretty We've broadly year China the resilient in say programming, I very North has been consumer would very this great for multiple constructive and growth. XXXX been to Care American

about we team's good feel chunk digital, And and at effectively our two-thirds a the have content overall I being for is ROI have then so spend we our we we ongoing to about out news really and a coming. productive campaigns And in Importantly, the is it there of ability level. manage is advertising about it and higher mentioned good and our which of some feel us big increased very and investment product so that, good

it the So digital capability revenue that's capability. growth execution process, includes includes second then commercial it the And sales the commercial management, innovation aspect. translate it kind for and us, I'll includes area, and of then

we're those all building our there. and capability so investing areas And

Maria Henry

were comparison We Yes, up up also recall, third XXX quarter. that you for low had XX were look points and I to way best that. spending and we half Lauren, this. basis between-the-lines, year, the basis I in chime full quarter if XXXX, And we fourth the in particularly in basis the we're back full so up the is of points, fourth of quarter. the year XX points at the And think

Mike compensation. out we've is incentive commercial ramped And toward mentioned end had our which therefore This delivered over year. advertising, capabilities before. thing and then higher in the compensation the plan which variable up about the call With of talked other year, investment we on the I

year, our the delivered therefore compensation on the we and under variable was last lower. was In true, opposite plan

areas way point year-on-year back January, for had look out I'd an ramp So our that spending we're the planned increase way the even IT, that's scheduled plan that effect. and and half a lines to was like at timing the constructed the of so more on second in thing the And quarter, fourth between there our we the is you in in last in programs just the execute. or

Operator

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

Olivia Tong

see for about to fiscal you're positive. be to expecting that to contribution Wanted talk pricing the interesting 'XX,

China decisions is So or hasn't place pricing function in levels that's yet putting on on more you place price as lap more that to of like making you're you management? been in you're that that revenue on focus a in already did promotional introduced or had that yet

Mike Hsu

Yes.

Olivia Tong

and your Has for in just change been XX? ' sorry expectations any fiscal - Thanks. any there promotional

Mike Hsu

do was Thanks, some is - I broadly Yeah, XXXX Yeah. would in XXXX. got issues we environment We think we and actions where majority from some of through broadly say, do in so in carryover is expectation economy. No. and I specific that or I'd a see some half. markets the volatility remain plan. of - big specific our And still chunk right with our Olivia. plan the in most say in it come XXXX, pricing of that constructive then address to took for have first have we've you'll to pricing the that the currencies we probably in pricing

that So aspect. that's

think think the isolated are ahead of I few There than was in less a and hot the not in I'd say plan. there probably the I now. impact pricing overall, and it XXXX, spots - isolated spots probably volume was plan a few hot were

Our to are headline, promotional those to advertising. do as would way and close focused to category products I more the we're plans say that teams staying improved fine-tune maybe and by launching would you but our that situations it is, growth and driving going want us the appropriate, on driving we're driving

of own through renting earn through share We'd our advertising instead our it think and promotion. rather and I a share innovation

environment constructive. should so now And think I the expectation is remain right our

Olivia Tong

price you've because market D&E, the about following Personal decelerated to see And nice then it's view talked just again, China past, but growth the you've on your actions a promotion the in Care the bit. volume up, sales just taken obviously have for

if talk could just little So to Thanks. you bit? a that

Mike Hsu

Okay, about China. Olivia to was that just clear be

Olivia Tong

Yes.

Specifically in China.

Mike Hsu

some we're gaining really really is behind in still pretty improving in consumers X on Care Tier improvement say we a diaper to-date at mostly momentum digits the softness strong really China, that's say Fem our marketplace. have driving of business. We're or - what's our an traction the innovation in lot with It and where premium good more been feeling X, there. still lower clip. we I'd up trends which have good Diaper very look little the tiers issues by tiers on Yes. is really our has growing we I'd launched a and side, double encouraged progress. X, on our

expanding are innovation. We our

We we to rate to market developed of year position. of our bit in that 'XX a versus in have year we're our business launching The in feel think think flat be plenty development more been out in across birth categories really life rolling probably in about and the and opportunity we're this we're 'XX, down China. so we this very exciting I innovation good bit has little Diapers But still a that well. we little the and still down as China early cycle there's expect

Operator

from Our comes with next question Dibadj Ali Bernstein.

Ali Dibadj

everything constructive before sometimes margins asked One what we've to where So so where of for of that air is pricing stay this your year. the I pockets seen pricing, comments movie is morning rollover, in your I earlier through we've of combined invest gross have questions. - opportunity there's is on which advertising couple expand but kind for about plan category else the this a three this too, this

get it'll as But gets little than two the a a it'll before this you again, worse perspective - plan. now maybe and seen seen a it now, not from worse in well. just having things get quarter competition that from Often start it before, from quarters bad, creep that seeing times you've pricing bit

to tactically notice not the have little movie same the or are picking how confident do is about next much this you that? over end pressure how competitive going the that way same you here while up and get So

Mike Hsu

Yes, that on I the I always to you that or - I the mean competitive scenario in we'll is, competitive price. exists. and the be we're marketplace remain overall And paint going possibilities think

end. have is commoditize good commercial, good us commoditize that's our really may that so people seeing marketing we worked for and I to over And Ali, and about our we that's time categories categories feel a innovation want emphasis, invest. we the maybe that dead our have covered and think I However, that feel where programs really in you about

think and high me, to for road want build categories. the we our take so I And

in - is consumer We value have to good of our there's you a in for products. innovation more to and categories in thesis developed elevating - left creating if reason lot to markets, you our that which D&E get the say do to our categories need and but buy you growth bring need by in our

So is. focus that's our where

it, the look will other still XXXX pricing. competitive, say We cost be, levels. also, above you at however, it's but I'd we're if on factor our

back still they are. side then extent so would And our some back still of in margins at the half we're way of all that inflation back the it is like - we that the the kind the to And we want now it and where We're them. other we anticipating are to pulp year. of

gotten would going I sharper but have more the So on, there lot factors market of with and say, tuned capability a growth teams, our is conditions. other management revenue to our

highroad the close which stay going to the play we'll so play but it, right run we're is to now. And

Ali Dibadj

again I'm others high wonder label just follow are who that I'm - whatever. private smaller you or or prone or not private I guys, road more questioning more not same in

we'll it. Okay. watch I guess

it is a in you a free a for elevated? was you perhaps that bit think little in three for about could it flow of it a CapEx like the how sales talk and about and the drivers XXXX question bit, free cash a Second little Could about Maria, particular CapEx certainly looks looking on as flow, was should the lot bit year, cash you percent of talk still of driven. we if down of quite XXXX,

Maria Henry

strong flow the quarter fourth Sure. The the million in actually at for was year. cash $XXX

flow cash As expectations. you that's our not $X.X - it's from down with line call It's prior billion was out, operating and in year.

we've coming a we CapEx. are this was for the - very and on it year, year know, last you got expenses so up plan funding So restructuring as elevated

out affected that of that and where first payables year flow on we've quarter about the we working a timing. big The capital a quarter payables that that is capital, driver by had had we had XXXX in big for cash very in in operating working basically high inflow operating the to driver. the the We talked of around driven before cash was XXXX, big which fourth back flow from particularly shift pay

out though, XX% Encouragingly I'd it was that, in and in year was conversion the better and the from the our for operations, our second in better days XXXX. flow and Ali, about the cash both but which trends expectations. when up We than year nicely of capital was XX true the half quarter. related look a I year-over-year the on day it call positive, quarter also that we cycle was were cash than at was up working fourth are third prior to were our

In CapEx CapEx, terms recall, elevated and as out $XXX of $XXX incremental again be XXXX that we on in the XXXX of expecting work through in to was it we main said will we restructuring. as elevated that million And restructuring program program. the we'll million CapEx were you

during pretty chain activities something or sales time so of I is and 'XX restructuring the on of a percent high we've on supply of And which X.X% was it think sales got number, the a 'XX like we of say our X.X% to that. restructuring, to historical be X.X%. X% from will that did of X% out and CapEx our of model But expectation down is that the that sales is coming

execute So line year what CapEx answer, been we've cash CapEx. good about that we is a for talking with in the and feel as long was restructuring. I the the but as on flow expected

Ali Dibadj

to So it's after XXXX. ramp going still down

of of X% about just there taking expect to be very we developing broadly a is that the low again and we're and continues question market in rate that developing Thanks or slow the talk only compares talking last me emerging signs growth rate? type markets with but improvement you. - that's are China emerging We for Okay, market emerging more down. account a Thank for growth tougher, single-digit grew for that helpful. get you continue I into question. kind comp earlier, about indulge this should to but of my

Mike Hsu

on markets, China, we look a very year. the the Ali, tough the good in pointed but feel I do XX% well, key market. Brazil at as the know growth I say think sequentially performance. continues our if think D&E we about slowed I very improving out, fourth CE, to are in bit excellent down you performance quarter, would trends it's a little Maria

So we on feel markets. key our good

double-digits driver in you so look front think key one Latin our pricing think cycle I markets slowdown, pricing to in we're Brazil, the for big cycle to if half the and of we're some in America, the I the starting quarter starting was example, that. was at fourth in up

mentioned, we've what And of you're other lot is, probably South and what's going part it call, and some but got we which we we've due to as a aware some there would issues Latin of Bolivia we're social very through those and there's some We've on America solid macro is, in, so address the Peru, which very softness issues Chile competitive of that. of least competitive got they're our markets. the through of and affecting unrest great team, is got issues managing in of some at working actually kind a plans this to categories, in experienced and

Operator

Our next question comes with Teixeira from JPMorgan. Andrea

Andrea Teixeira

question My on Difficulty] is [Technical

Mike Hsu

can hear Andrea you. you're We cutting barely up.

Andrea Teixeira

know I'm I don't sorry, hear you question. if could the

So is on question markets. my emerging

think you with but well the price lapping doing increase. digits, I double China double growing just mentioned digits So Brazil

other you America which guide So I in of that continue deceleration smaller, to the develop terms markets embedding are Latin is you just it what for your is emerging expecting are or into want kind low-single the understand of and X%? South in markets? double of that X%, be about developed the So I your would embeds would markets obviously emerging so your separating just into be much to digits clicking markets developed to

SG&A already the of and math, a - that saying I of innovation, according on increase so already million. like you're try about then lot you question, reinvestment invested top were to around question kind our just reinvesting $XXX $XXX a were - And clarification of million have you your base you about on like understand but of we

into into you growth? the that and breakdown your advertisement so understand guide, if the I large including can it's So mid-single items compensation, kept line the why can in but into we R&G assumptions, digit break understand

Paul Alexander

were There Sure. Paul questions there. several This here, is Andrea.

Maria. two investment or the Mike the then and and take questions one over we'll So to first pass I'll

in a and we're pieces On outlook have Mike several developing the markets, in as confident in hard are give to XXXX. don't you, at trends the the we XXXX - and level. probably that We stabilized, but lower we in said, first half There about moving some think the in a number volatility for of saw those back largely fast is there increased several emerging markets. that But underlying the business. the of have

as solid have that So our be be over us of overall, XXXX. a we unchanged expectation organic developed is enter is deliver time. what in developing looking markets, time, XXXX with we for growth to we In general, will would period But modest from and been emerging markets in growth. delivering which in

Maria Henry

And terms as be expect expecting in dollars I'd to secondarily the increase capability by advertising we a as sales well percent on that driven it to outlook we investments. for of say XXXX, and both higher then and are of as between-the-lines

in benefit as the Just from restructuring we we'll a SG&A, few incentive are XXXX, modest other reminder, some a benefits normalization. have expecting pieces of in there is moving compensation

our we'll labor run way, and And through other then other going the that have normal SG&A. inflation cost

of that, not a for target of increase, increase. interpreting but will that be level are specific healthy we're Beyond we the providing a level it

Operator

English Our comes next with Goldman Sachs. from question Jason

Jason English

Argentina emerging how points footing back this numbers. a to narrative wanted organic, X quarter? to markets I did much the because hard to that with having I'm come the time add The

Mike Hsu

less It points. two was than slightly

Jason English

Central time 'XXs, they the sort figures that Europe growing it right Brazil, growth got better. always Is like these having or EMs China And saying is the Central point double like Just thought China if you and emerging I Eastern now. just down it and we've substantial and non-core north of were Brazil strong. digits, view would hard up growing declines the sort is because giving So do there EMs the slightly and weighing of you're in growth quarter? other underlying Eastern for is where you the market or I markets not that of Europe us are a annualized chunky they're X

kind no strength having there footing hard time really I'm growth a of really but aggregate? in So

Mike Hsu

Yes.

I continued other I what So you growth our and little growth the markets add was a postured America you might all think. which more It's of softness substantial would when probably or chunk out again, is actually think a you probably term big it and I little as it's those and a then good think up, of that. Latin

Maria Henry

also And about the markets than North anticipated. consumer the then includes well And had the has numbers numbers business. D&E America as as outside as would with what same talked have that P when but factors total volatility, the those lower the we K-C we we Professional get K-C in obviously

Operator

comes Wendy with Our Nicholson next question Citigroup. from

Wendy Nicholson

a but doing about I'm lower and a kind and of there's margin back much America the on margin kind improvement from just markets. restructuring you're lot about is margin next international lot centered, international Thanks. line know of we terms Circling can of wondering long in a in talked how benefit questioning will international just how those just until restructuring the years, whatnot. be will five real and to of structural - see the be I three has it the North markets? before We the internationally But of pricing longer-term a over of

Mike Hsu

Personal Yes, related a would there's and for common couple are and different across factor. I which mean. in that's of one the planning improvement margin Care, say, to especially to Well, I I we gets better going be over us world, more think so the to things, assets time one restructuring

to But the piece other our is categories. our elevate strategy

We planning mixed premiumization be we've innovation going expecting mix are A see are that positive delivered that over And - China. to great drive that's feel substantial more and margin and and we would improvement. going we to good so time. product for example of

with levels that margins record at are Our gross improvement. product

innovation So our that's in kind of minds. a win-win

Paul Alexander

in see margins XX-K And it our despite currency disclosures in geographic publish were and when Wendy, international the to that in I XXXX, say to our February, we the but total you'll somewhat can preview volatility up be able our headwinds.

Wendy Nicholson

to thinking your it's it So is gap on significant for margins. margin focus long the just is I'm obviously to the growth extent is, headwind actually a as the as accelerating a there of

I'm So that you those love a think as it I but years, to the up can't as to you faster obviously if over to next would ramp outside cost few just see the come margins at trying U.S., balance grow about going well?

Maria Henry

Right.

Wendy Nicholson

aggression only Second XXXX? the you size in but because mean you guess, I part we've of so retailers question opportunity guys American aggressive we just label just commodity like seen pretty more label on to private it about of given more back private on we're haven't that seems of sort that pricing. those your mean also private label? should investments, some some been in not of in of your Do expect given the I surprised, surprised I label Are private categories, more at promotional we're get unique business. many we the categories, for think surprised environment North on talking are

that to is loyal and or what's on threat environment? and it innovation in that sudden the is we XXXX cost brands So really your take are that of a your and legitimate at look category just all consumers as a

Mike Hsu

not private is, seeing key Tissue maybe guess the for thing I a has little general, label 'XX up, throughout right. we're pricing moved in in in me Yes, increase particularly

brands the not the select but some at in same And so in have. that maybe general moved pockets, has up levels

So that's factor. one

by overly promote which really choice wouldn't drive to choice think reason because retail is, of expect sense retail don't surmised make believe that consumers their would private label, mostly don't the outlet I because label. of probably I or it and you of private

that drives brands study make choices that think concludes on they after and based - that and they I what national that's behavior. the study

productive And so behavior. label the know promoting private I on side is that necessarily a don't

the skin in brand drive game In more fact, if help I right that retail would would national suggest the I I that business say, think effectively. strategy, grow the they will but have here I

Operator

Kevin comes question with next Grundy from Our Jefferies.

Kevin Grundy

and wanted dancing Procter's to were as of to margin, fantastic Mike, some different morning. I gross guess topic was the come one benefit asking back to this performance you your kind so albeit seeing pricing I costs it Still but dissipating with commodity respect lower. was ways, around

retailer's understanding the of So from perspective a and brand. importance

retailer's asking a to promotion. so to wouldn't guys what on be this from, been asking dealt They promotion. want and the why are be now from this are moves perspective, back we've coming trade a or some take moves, private So for what price of manufacturers you to increase, okay right. label to back forth they never through Procter But

that why what's environment, lean some follow-up. of now the of retailers force manufacturers on have back? the to in a wouldn't the issue now and risk - sort So then current start dealing I And this

Mike Hsu

I think, point inflation had well still Yes, we that in XXXX. I again out Kevin, still

in still than were costs higher Our are they XXXX.

that, impact multiyear, far our hasn't fully it's that. so this when from actually fully even been - hasn't And recovering say has recovered we inflationary pricing

So pricing. that's my the of from my chair view kind on

going the side side need we're how that, to On personal most retailers be that's of other I with would they're talk our views, around be but my you'll the to discussions category to what the to get their grow interested retailers think to tend in. and

what their is conversations - right focus As support days. we've kind plans and category most these are that's where of the that's where category our with got innovation and as long about really of growth drive to

Kevin Grundy

a to question asked quick a bringing I'm that follow-up earlier. was

try that's conservative that's FORCE, benefit the it Restructuring, that, around hard stepping putting to me, and areas, conservatism parameters up is and figure that what in and some of Can the of from your about more out level level or the OpEx that seeing locked marketing analysts from that, of in advertising looks a you absence of I you're that whether you're investors, envision implied. much kind how given that think marketing of what to us commodities, other excuse you're seeing are and help there seeing sort guidance it's think investment will certainly because versus loaded. to that's advertising from

level the us you can from conservatism you. Thank you with the best environment? as of help of me. kind behind it maybe us flexibility and And that? competitive think can about So Maybe that's help

Maria Henry

lot go that that. Sure. you for I you that the a upside XXXX we think What a the accurately as that happen happen of I would with that couple can and year. What on there my year. bit say assumptions we variables we've shooting got coming shared into ago, the that balanced reasonable is on I is on plan up years primary can't downside in of we've a we're go We've that last tell year a also and fifth here are predict that seen into

react the environment we the in, competitive commodity potential this year volatility the go in a on and there we're through potential there strong And we'll so far to on is that talked so but volatility the is as competition side, We've side. currency lot activity, call. about

make of to need achieve year-on-year. that the balanced make we on moving as and that to do, to we will there So strive during we the deliver pieces we decisions the year a always model lot is

Operator

next Our with Strycula comes UBS. Steve question from

Steven Strycula

quick volume on rate I've specifically got or innovation. for I to year, full to we year Mike then should a outlook growth mean it you're absolute is in and 'XX a the that see should the driving going we that. your the for fiscal and interpret improve Maria, for question organic follow-up sales imagine that volume was what should from full say for Mike 'XX

context innovation do how the in, relative So did XXXX? put Huggies it, the diapers XXXX special call to how the for for Diaper we delivery in

Mike Hsu

think is organic The to might you take that And pricing, and we're to negative you're performance in both very expectation underlying daunting is our of a category I is. our absolute probably going you're pricing going mix that would the volume the going expecting really our was plan be volume performance accordance elasticity to whatever The to I bit Yes. growth, reflects a we would pricing. volume still volume in as X% then outlook you from obviously I not have innovation, for as is balanced on by Its say again, the little obviously if and cycle growth good. volume XXXX and effect your perceive Steve. in flip because, is say, that as what mean our

do driving of We or we some and really new had effect most innovation that and increasing initiatives underlying so actually price than new come and offset of the whether but markets we categories distribution or and advertising. launching more in countries underlying that, anticipated. had saw think were they good we different elasticity I And saw the volumes

we XXXX. we execution in very had we've good - got very So think

impacts were don't Did than had to to better And related we elasticity was expected. related execution help? were think less more 'XX that expected, of than it the initiatives I effect was volume in we

Steven Strycula

it does. No

deflationary to a And in Maria piece, outlook on the $X.X you. was fourth million. what Ali's into the through be For quick could the in is just million baked question, your better assumption? it you but $XX $XX follow-up help flow year billion you little if basically should million XXXX. to commodity full $XXX number quarter, or XXXX worse commodity a think give in us then Can an is Thank of little operating cash that outlook

Maria Henry

are that to And the up up into to is are in Commodities, we million operations, XXX million fiber half of of back to be next from $XX assumption year. XXXX cash particularly we expecting built XXXX. on On expecting the to which pick in our start for

Operator

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

Mike Hsu

you very we and today Well, have questions everyone's much. Great. Thank day. good appreciate a

Operator

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

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

Kimberly-Clark (KMB) 23 Jan 202019 Q4 Earnings call transcript