Kimberly-Clark (KMB) 25 Jan 232022 Q4 Earnings call transcript

Company Profile

Participants

Christina Cheng	Investor Relations
Mike Hsu	Chairman and Chief Executive Officer
Nelson Urdaneta	Chief Financial Officer
Dara Mohsenian	Morgan Stanley
Chris Carey	Wells Fargo
Steve Powers	Deutsche Bank
Anna Lizzul	Bank of America
Andrea Teixeira	JPMorgan
Lauren Lieberman	Barclays
Javier Escalante	Evercore
Kevin Grundy	Jefferies

Call transcript

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Operator

Ladies and gentlemen, thank you for your patience in holding. We now have your presenters in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of this morning’s short remarks we will open the floor for questions. At that time, instructions will be given after the procedure to follow if you would like to ask a question.

pleasure today’s my Cheng. presenter, now is to first introduce Christina It

Christina Cheng

Shelby. our to and Year-End Thanks, welcome Call. XXXX Hello, Earnings Conference

today VP and morning. published of supplemental our outlook Hsu, We issued Nelson this Financial are that release Chief Finance. and us and press Officer; our Officer; Chief Urdaneta, summarized Chairman Ezzell, Brian materials our Executive our Joining and Mike our results

Event page You of Investor in can find these Relations the resources website. our

today, begin Before a few we reminders.

– forward Please to include could Our statements latest today XX-K statements. will statements actual for differ that forward-looking include our expectations. of refer Form results will from cause our factors the to materially the or XX-Q list

QX release will consult floor adjusted of Our focus GAAP XXXX the business, a public exclude and provide the results, news then on Mike Q&A. certain will comparable to perspective release. and for financial these our adjustments will measures. open about for Please will we more in reconciliation information press remarks which earnings filings our items and described his

let over me it to turn Mike. that, With

Mike Hsu

and have Christina, challenges are Back our welcome when about in face. introduced K-C. could and thank Good you, unprecedented you us all we Thank Okay. strategy we XXXX, today. imagined morning the for not joining to to we

the did to purpose Better families, At Over Better employees support health people of world. and and a to were counted our and customers, we the World. teams their needed fulfill of care, I’m our hygiene on do proud our around four our years, our for of achieve what the Care consumers, our what the brands to able the care our past of K-Cers best, that pandemic, provide great all peak communities

innovation our results, growth. organic as strategy grown one, Now to In Since look by time, we’ve Theme accelerated in sales at X% accelerate and emphasize. back I’d average sales about sales X% the number the our offering organic to delivered improving like goals what product in and out XXXX, by uniquely organic execution. billion to growth growth and achieved our we’ve commercial our on by challenging a our world-class business positions, was meaningful working. $X.X global there over our are is turned delivering beginning of be themes at In three with This that we year. XXXX, and environment. market increased

XXXX year a also in we XXXth category marked anniversary, generations defining innovation. celebrated which of Kimberly-Clark’s

many brands. under of of care We’re including our tissue leadership facial proud and the created Kleenex and Kotex to have feminine categories, our

inventors heart. We are at

the organic consumer-centric last over category three accelerate overnight XXXX. contributed years of protection, it’s advantage focus us obsession, New and during create enabling Kleenex is technology meaningful DreamWear and XX% product value products to Comfort, our ultimate Whether to Allergy created Kotex or growth. our growth for in

Deluxe, the where in in in This best are declining is a challenging Huggies to continue of softest upgrades we and face products growth major led post COVID China, Super evident birth by in among and market, conditions. perhaps With double-digit the operating our the the organic most thinness, China. dryness diaper in rate

continue we’re two, superior Theme market. margin recovery. making care strong leadership Our on to largest supported in and child world’s technology by will strong the number portfolio anchor progress baby Kimberly-Clark’s

two years, headwind point past Over X,XXX gross inflation a to the $X basis we roughly unprecedented worth over faced billion, margin.

an job excellent this done Our mitigating teams have impact.

discipline cost $XXX pricing commercial agility broad and enabled over savings. to and implement leadership, rapidly us generate in product cost Our million actions

Recently, This in inflection first profitability XXX an revenue management headwinds Collectively, relative points. actions successful last quarters. QX and in remain prices market growth inflation some the currency our pre-pandemic fully of they to to ease, begun although Gross was dollar and elevated enabled margin basis. to half in over us in basis the offset have The levels. inputs of second QX year. in a actions these year-over-year implementation major the eight drove stabilized our XXXX of in by improvement on increased

the will through the time this P&L. take also to headwinds our midpoint in revenue operating to for margin the range, will below margin growth plan benefits enabling share this, we’re investing XXXX flow XX While expect points. XXXX. X% impact our continue gross we guidance will through With year. translates work business. our to line, this approximately improve ongoing and us incremental and to reduce the these contracts by Nevertheless, This per leverage efforts recovery time, in to to by continue X% efficiency to same management we costs. encouraged while positively At to of aid continue improve in it our scale At basis we’ll our earnings

intend to the also for dividend our We year. consecutive increase XXst

we to growth. Theme sustainable and balanced number to drive three, will continue invest

scaling We’re our innovation value, benefits that consumers. for and better more better delivers care

great demand for strong continue see products. We performing to

pants compelling same be the bottles our and of broad the range offering programs. performance time, share care, our three exciting to which initiatives Ultra growing standpoint both we’ll pant, for need GoodNites and several a in year well equivalent exciting of youth launching hold the upgrades XXXX, for drove adult America. through Thins diapers. Poise North in water in value sizing We’ll as Huggies New can past commercial At of leverage for from expanded point exclamation as unit dollar address gains the this including the

fulfill excellent management the of all remarks, a continue very We’ve assembled up for experience unlocking our to countless an team Better with wrap the prepared standing Care execute They world. I’m growth. global World. to Now around K-Cers proud excellence Better tremendous that has challenges in of purpose of tall my to face

growth long-term long value sustainable a invest of to runway we’ll create and continue balanced We our of us, have ahead growth shareholders. for to and in

wouldn’t you the let’s if for line Shelby, open questions. Now mind,

Question-and-Answer Session

Operator

take first from Morgan from our Stanley. We’ll Instructions] [Operator question Mohsenian Dara

Mike Hsu

Good morning, Dara.

Nelson Urdaneta

Hey Dara.

Dara Mohsenian

how you? Hey, are

Mike Hsu

Good.

Dara Mohsenian

a in the outlook little just I more wanted So XXXX detail. into to go

helpful. out I’m assuming you’re year? can assuming First, would just you’re prices you outline look using fully next maybe you not but any clarity as RISI forecast, be Mike, you what the to just there pulp are, for

in would spending, you and categories just the commodity more you or growth ad a of Are you also opportunity? is environment? you about are investment is us it plan functionally XXX sort spend, geographies to areas pull such and that more by just helpful. basis points greater it just Thanks. invest? talked to XXXX, Can a bit there Is people that? is where it other it help detail And behind And to product you specific had about then maybe How thinking motivation back given tough understand little of you are in the maybe that? margin. areas, little in on be headcount So a

Mike Hsu

we’ll Dara. Okay, do,

great we’ll But feel brands our is, XXXX say plan get the and and First that. about where performance quarter business we of sure. and are can to deliver talk we I fourth where for the all, globally overall, in know in about I to performance better I’d a

in Most already our to for momentum. been but actions as Dara, plenty our announced organic going customers. pricing next pricing, of are plan build year. growth We’re the in there those clearly plan new on is have well. of the to There carryover

year, this investment, robust than generally demand good In and We the very resilient. if of and will got would for last we XXXX. program Consumer innovation about really commercial year I I a ways, be terms remains I that. in say, our stronger in some feel think But I’m excited. calibrate, categories

think aspect, And have I things in. good from so invest that we to

and we’ve for years. a challenges terms reference, the bit slightly back that advertising last overall we we haven’t But spending, pulled much. over the of as had over up we of more, couple little obviously, In years, the couple had just are of discussed this last taking back the with

excited investment programs the the them. back that good some evaluating out. pay commercial we’re have Dara, invest we’re behind perhaps XXXX. back and that about more our the And of that, pretty point, back probably this returning is programs that of at on we in I’d returns have. they want where say to this we sure were to making we in merits aware, of the based and And But you’re it’s at beyond we And so –

great And about that. so feel we

continued will about got $XXX expect single-digit recovery continue while FX that We’ve high offsetting, the that. our inflation making So from margin investment. we while release, I organic million growth we’re see profit I and in to momentum, operating we on progress said think, say in we what headwinds.

that And items us lines. the so yes, the But guide, guide. back of EPS some or get between mid-single-digit obviously, we restoring mid-single-digit low EPS saw, are to really you as kind to non-operating

we thing internally, calling came last I we time right. the seeing So million think, on think billion are Nelson say, top the before of did same stayed we year, will were Nelson And about pulp. our within for closer for the aiming glad and up say last $X.X this I let I and ended when range. because will I’m cost range still we Dara, of did I’ll comment I $XXX the – original to year. we – our inflation. We out

for year. As I mentioned, this very have we high-quality plans

about excited really We’re that.

So end the top we’re of aiming for the range.

are? we remains we Why call extraordinarily it high. way Well, the volatility

have the is there on. call lot rates, interest supply a war, on chain, you FX, a good unrest, And COVID, so civil if going energy,

on and then a and that’s follow-ups. Dara any I’ll pause if So Maybe let pulp comment have Nelson mouthful. you

Nelson Urdaneta

QX give complex and to prices whole, QX. XX% where to in a prices we’re we’re line the do where Dara, as or bit And is where they as reference, it little today, this we’re RISI market reference. in fiber on yes, eucalyptus, and I for with QX, plateaued add, to slightly began just as full have average, as of remained year. year of the take we into at. turn more as what a that in fiber less just to And we question largely at Yes. pulp in think, to an would of And down terms be your take actually the we a in example, context Overall, projecting reiterating have and a

some begin take and the cover would all thing the RISI. contracts into components that fluff, fiber complex. One of at of don’t mean whole account in we for is that to different throughout prices ease into We components specific need and goes same Now XXXX. other actually of to the enter we NBSK we fiber. see I

to P&L. one necessarily one to that these what you some at time does see our So RISI not in of or translate indexes

So that’s out. what’s also playing

of To pulp million in commodity as complex The give you context, half our inflation around midpoint. right is of whole that at we’re million the out a to quoting $XXX of the guidance. a $XXX that

We up before markets and in whole, are number for XXXX at pulp on what compared end. that very a this we’ve up a we’re giving stage, be us seen forecasting small will albeit as what see based to on

Mike Hsu

that paying. declines want through those add, Dara, will pay I see what we’re I’ll time you while we’ll spot think take of would to I saw also, a to our little what you you if we’re paying work a in is system. RISI some in take say

Dara Mohsenian

Great. And one helpful. follow-up. That’s just quick

On also additional question currency models country categories one Mike? if indicate guidance the there specific or XXXX. based worse our you’re geographies higher product ad exposure. the revenue spend, I And guidance most then your than The on, slip focused can for are in, just FX is on

So FX helpful, clarity pretty impact be also but terms the to would of flow-through just relative profit profit severe in to the revenue. to any there look

there clarity be helpful. So would Thanks. any

Mike Hsu

have it’s would we U.S. great broad and appropriately. want mean, major to in the that the sure we’re I the we certainly, I Dara, our that spending, say like news diaper for supporting category, markets Yes, sure, make improvements.

I that you in. to say but with mind of see it. this is business second news do that’s of we’re your poop the cannot half. in it to call, because it’s And – on so earnings exactly the coming an side share it out blow kind will not what when things, think and I But the has

with poop. And things so we’ll do miraculous

so one set of that’s areas. And

got is we in China, about momentum The fantastic huge job. great doing We’ve team a feel and that.

going continue in to We’re China. brand digital plow to our advertising capabilities the in and the and in invest

around good feel are the But areas. obviously, two our around those investments have so the world, traction and world. And we about we core strong

Nelson Urdaneta

see the when that of that year, much year-over-year. just we second into not the a are that concentrated so important around we half that unlock year, comps And would we’re not drag. of the line in mean ease as we of the or I first question a next it’s would highlight talking year And addressing ForEx, points bit, top the we really headwind Dara, line, do a to full get for be from said percentage half top standpoint. on we’ve – a to the seeing two that the on we that little for the

and couple things. down we bottom And then the you when a out to go there. line, So the flow-through to that could work of

about a we’ve the to of our As that significant have third reminder, do costs either foreign from operate. revenue from of our a exposed of about and in But which coming half we coming a overseas subs got impact P&L, hard overseas. we profit currencies in the amount

The you but risk they is through spot to strategies we model covering other risk in that not those details into have management get element mean, going need through I the account to work strategies I’m not that have to call, the particular as place rates. flow you in the as take we we’re into management P&L.

you’re in if hedging you risk that’s strategies do. that management doing and a As we not engaging know, one-to-one

Dara Mohsenian

you. thank Great,

Mike Hsu

Dara. thanks Okay,

Operator

Carey from Fargo. with question next our take We’ll Wells Chris

Mike Hsu

morning, Good Chris.

Chris Carey

one then currency – what attention question. so But the it’s follow-up on here, the we’ve it’s good because on seen another I versus getting I Hi, atypical this think much just such so an right. currency and just piece multiplier morning morning. piece,

– hedging so and And like that’s sounds have I good something into. facility appreciate and it you there’s

now we flowing on worsening in what maybe what’s this a a this – an how currency should So you’re currency imply take model is a changes given. through I’ll the should So improvement this think Or currency? that in in in hedged, be just your now or year. about as outlook? going to change And does –

you us So perhaps just understand can help that.

Nelson Urdaneta

of will And because will line, on we things, hedge Chris. question, be top it don’t it fair a what line. couple be top That’s a obviously,

translate. we the are do. models currencies in that’s currencies we and on essence so you have going we don’t go risk When it to hedge, amounts what’s for we to will So management strategies, it place costs, depends there happen, hedge, in there are and

So it’s model-driven.

would question, in So your currency, to impacts. changes have

where depends any it the on it currency to in won’t at, all we’re apply point Now payers at given because time.

we markets happening So definitely that very that’s see hour. the on as will fluid literally yes, top line, on and move,

changes profits, what’s to currency to extent, As and our the we and what’s some also hedged. will we not some on depending update see, hedged flow as models

Chris Carey

Okay.

you. Okay, thank

we prices one Just Clearly, may what is happening in worse outlook of relative harder given, the international to I thing can morning commodity probably that’s forward that on suggest front. you’re that other than markets to be think would see more on this expected even saying track.

sense. now conceptually, of, pre-pandemic farther say, end that year that margin get at below a pre-pandemic. think to still a So organization makes to probably I hundred think gross I But nevertheless, points structure. few XX% we’ll does have the basis margin the goal even below operating And back margins

at like been medium that or you commodity to has think feels to Do objective enough talking a volatility non-operating long-term inflation least there’s you just realistic that long the inflation still will savings It the there very about. and take and you’re such that’s a time. probably or pricing not get it with

that. on thoughts any So

Mike Hsu

a on it’s there. the the margin the we’ll is view get for we our goal, corner we’ve my I – my exceeded strong And in continued program. turned performance. like inflation definitely quarter and obviously, But I We in remarks, and year. this saw – feel costs Chris, said the input prepared realistic pricing full fourth think recovery Yes, organic for I

for fully year. and FX full year the offset last we So inflation

our And by operating the job QX. XXX think said, margin, great teams stabilized did there. in QX I and in expanded I So points a as basis

making there still okay? into the are I my and say green costs. ease. see progress even though green so think headwinds cost coming From selected In commodities there’s there. start say we seat, I I’ll shoots, have – And cost see the But we seen let to me this shoots, terms of year, outlook, we’re great about

been it’s though, it a having reversion see And don’t rapid offset year. I’ll the or of if around also of I Historically, as some year company this fast. have is hit and this years, going mentioned. that. seen over to has say, I don’t timetable for I couple the been this not. we’ve it. happens, last another We corner, XXX there in XX for We extraordinary signs it when headwinds reversion, know years, happens

But At when margin the going when will But accelerate billion line, confident our And will right? it will time that to that all level, point, I because it’s some past, at our recovery. I which counting margin to back about feel deliver it we’re point, recovery. down. it years, it’s is at in why not we going $X not it happen, said to on come the two reversion over know stay accelerate And some happen. does, it as does

Nelson Urdaneta

a add And for of time margin. had row Mike to things, ever margin first little grew that where the flavor too, QX, a in in quarters did gross couple margin, we we time expanded in versus gross pointed A three actually was Just the out, mid-XXXX. back the we Chris. on gross we as year-over-year last

it point That not that having been remaining been about of and sight happen. the really we that recovery been the So of had talking reinforces margins to a going Mike’s what is And line July case. to few had quarters. have committed in since

year-over-year margin our stare calls year, expansion place. in As gross every we what quarter. we at for this in have plan That’s margin

our of at the margin, the quoted we’re actually for think full what it’s higher for XX% at I operating we’re aiming mid-point expanding gross bps. year by XX the you because plan – of margins

net brands. about the basis the at investing out XXX points If you remarks, and look in of the sale release what we we’re put into

expansion margin that planned to and to here. at XX you the to bps, what of sense that back So we is add least that that gross in a we gives be got going have

Mike moving here. mean not on have So line. green in, say those staying building the I but – on we’re we’re productivity we’re we shoots that definitely sitting

the also innovation, on programs accretive on moving and net place. revenue the growth have we management We’re in margin moving that we’re

all as past, said there. the that, only in reversion the of really So has will Mike us thing that putting is this. so. that would That’s And accelerate do

Chris Carey

questions So gross because into basis get margins. going you’re and to I’ve the can XXX gotten investing apologize, confirm, I Do up, and is what points the back this, I’m expect I margins but just on gross queue. in you

for can confusion. if XXXX? confirm I your So margin think you been maybe for Because just some has there expectation is what you gross

Nelson Urdaneta

add, Yes, yes. I want you right. to

like be would So it this.

margin. of We have basis operating XX points

XXX You points add That gross XXX at would basis points gives you brands. which to least by margin that reinvesting basis the are into we have expand.

Mike Hsu

makes sense? That

Chris Carey

Thanks Yes. Okay. much. so

Nelson Urdaneta

the That’s math.

Chris Carey

you, Thank both. Right.

Mike Hsu

Chris. Thanks, Okay.

Operator

We’ll take our next question from Steve Bank. with Deutsche Powers

Mike Hsu

Hello, Steve.

Nelson Urdaneta

Steve. Hi,

Steve Powers

good Good morning. Hello, morning.

Just implies, up a that that we’re that that is math on the numbers XQ with the of XXXX to that’s tick that if the the gross margin realized. you working gross pick because sort margin take you below But objective too. math literally XX%

So movement to it progressive about gross Nelson’s doesn’t XXXX. just imply more a in point improvement seeing margin lot sequentially, that

in and So talk costs maybe of, just the the about that like. overtime, easing context

Mike Hsu

Chris road an The margin recovery to is Steve. buffy – one,

Nelson Urdaneta

So of bit the how we think that add Steve, little on there to math. a get just color I a few – things or

the account as of think at thing we’re is $XXX into to take we’ve important at I midpoint, the So million staring guided. about right costs commodity now

currency, in million about other We about – around then currency. in in $XXX at we million. the terms costs, have have And midpoint of $XXX

is planned revenue when a by a the XXXX. we we’ve solely over add that from growth row, realization all around that So another will two-thirds it for, which, of you significant carry for having way, year be up, management in

were be able ForEx, what going commodity happens year, end at positive we pricing and to fully for the neutral. billion. offset So last net $X.X were of pretty year, to We the whereas much is, the we’re realizing

pre-COVID the is and and around a would So indicated, game impact exiting are on categories the QX, you not us basis, XX%. margins again, to to a continue we that’s dynamics our mix differs. through. flow line pretty Mike quarters that and recall, different straight the But quite margins, gross the the the were and because, because it year-over-year our cost reality if expand going And between be as it’s

we’re advance the So be would with planning making – on we good full would year for. the be pretty movement getting that we

Mike Hsu

a Yes, to I think my for context, say and said for facetious, Steve, add I not prepared maybe in just trying one and I I’ll hyperbole I’m remarks, road, wasn’t because I when few times. bumpy unprecedented sound it’s mean, a I

all And COVID product supply just so on side, or demand availability and which either and of issues caused demand, then the in the in effects to demand there’s just out, with associated obviously, or terms war transportation the change and the have supply kind the been the availability. unprecedented of COVID, in out, side war, on you

of a around. there’s things lot moving So

storm, Then the you of throw this point, Texas on impact at which, third in our the Texas I’m storm. order

right, very in got you And in lot not all demand quarter-to-quarter stable because volatility unusual are and There’s inherent I a think cost because business, this all a But to of be you quarter-to-quarter they a of that, and so perspective numbers, going typically, that. around a our were to little a both the consistent very move bit. and tends business. from are things from perspective,

Steve Powers

Okay. precedent. has I the That’s agree. fair. new become And Unprecedented

So two the makes pricing, I could. about One on sense. management. mostly follow-ups, growth great. talked carryover. if I you essentially I That’s That is guess, enhanced guess, revenue net other,

actual of might them other you count the what just would around In you those actions incremental, are actions? terms list some versus – portion do kind anticipate that And where – RGM of price be helpful. of occur pricing just incremental movements thing reductions, and actually versus is of color kind

you’re mentioned very trade in in as thing trade levels it’s the across companies much. some downshifting you been you and through that terms retail terms across about the in another XXXX? seen around And how have destocking of go of topic inventory levels just inventory a that inventory Thanks release, thinking been what some just you’ve levels, color then other reporting and

Mike Hsu

Yes. Steve. Thanks, Okay.

fully XXXX. moved this the offset have on right? the dollar say, of our so plan pricing all, years, like year, proud majority last of pricing in I I’m across ability to couple the is – we’ve been would of really additional it’s basis the of But actions, fast already inflation First taken on the we a team for And productivity their and carryover, to are well might say, we’ve which pricing, is, but spending. whether there markets changes promotional be is taken trade list or general, as that But around new actions some marketplaces. most in RGM going announced you into

is make would will the up those people typical are been general, RGM, holding very we say are moves that want to on. place. in the well. the I didn’t evergreen be it’s the capability. kind have more modeled I we’re good our years, able past in very, going invested well. would demand then well. topic to making. will I that originally. management very general, know are overall, pretty executing In a double-click that been in that So And of we’re had I we revenue say, If programs not think we than over general, in we our not growth five It’s feel But elasticities to about working – if would But have we it, better holding up,

that hopefully, on the pricing So that’s it pricing? on maybe, Steve, follow-up, one. Any the

Steve Powers

No, you. Thank that’s great.

Mike Hsu

a and to generally categories. would for manufacturers. at inventories inventories, they retails inventory, And meeting, retail experienced retail say going I happened. because was Conference afterwards, news that we started or that at year-over-year. typical to it’s it almost were in typical, it’s asks not perhaps conference And look at to to two us retail September couple well investor Okay. were would a that of as and in I in say, week every we’ve kind what interesting. been getting – our Lawrence change September. September from a subsequent us then was affected It – had Nelson I back starting in was it about

business So America, performing which what think in up It at what it did my really soft the consumption, overall you organic at. say, is look is a affect little was. came because between really personal our in I if And is about consumption fourth quarter, the North the I’d we the and tissue mind, relative care was what to X%, consumption in forecasted.

affect some other your you’re so And to going that have changes shipments.

But shipments long-term in over my must equal consumption the book.

X% the tissue. so was X% in up and And for care quarter in consumption personal

remains feel issues. like typical inventory the So business we work through we retailer healthy. very some But

Steve Powers

Okay. Thank good. Very you.

Mike Hsu

Thanks, Okay. Steve.

Operator

question of next from Bank America. our with Lizzul take We’ll Anna

Mike Hsu

Good Morning.

Anna Lizzul

your Good morning. then the from question. XXXX. of a of why U.S. inflation is in in different in of was follow Meaning comment costs? wondering terms I so Hi. really Thank you the guidance if for of much up. what U.S. your I have And can the of outside outside on most terms is the you markets rising

Nelson Urdaneta

the of on commodity Yes. quoting, international that inflation general, – markets. things. million a $XXX couple Out so $XXX the the majority In of impact, we’re of inflation, one is the to million the bucket

big the the So be not the by U.S. largely would market – impacted that bucket.

could other in see. broad-based. – However, down when international the on But cost, the we as you mostly then would be be markets move the line would obviously ForEx it’s

broad that portfolio. So across based the be would

Anna Lizzul

pronounced just offset that cost expect input first to as should about just then think forced your the rising And more given cost cost the we half how Okay. half. we year, savings in of savings first Should through phasing greater the the well? in the are

Nelson Urdaneta

Yes.

in the it got past all to difficult and a into us not live. comes it are first the skew lot typically, play. would on said our depends FORCE As because part the going projects. into I we’ve projects of And predict Anna, are that of exactly how year not is we’ve savings linear the quarters very movements for it FORCE of go within live

give planning. internationally I a chain be as you should can’t to managing challenges, We’re that you how specific still weighs plays the I it. hope especially some you the bid. percentage through year. supply dealing about thinking And guide helps and But on that into of we’re what throughout how FORCE But

Anna Lizzul

very Thanks much. Okay.

Mike Hsu

Thank Okay. Anna. you,

Nelson Urdaneta

you. Thank

Operator

next We’ll Teixeira question our Andrea JPMorgan. take from with

Mike Hsu

Hi, Andrea. morning. Good

Andrea Teixeira

to you? called So the about wanted some impact bridge And hope think top of volume obviously bit pricing. you between line perhaps are two-thirds, How to understand have morning. I you Good you. I out carryover Thank pricing. a guidance you’re I just from mentioned and Nelson,

or announcing are embedding some you pricing. potentially that implies it So additional

by all, check flattish So on for you’re XXXX. to math, probably volume And to embedding first that. up slightly of wanted my

I’m So that regions figure would to hoping what be?

year. year. puts And it like terms us a had year D&E comps and very you markets? in had of acquisition can because takes related a seems you I’m a strong bit to D&E having regional Is add and you you’re China can I in Perhaps there’s it reverse, that was fourth there. that I’m obviously D&E made me the towards to the like strong quarter. XXXX, XXXX. wrong, softer. developed understand in very Anything correct that Softex was And if bit if to tougher an from softer a little So thinking, me end was perspective, of some Southeast out Asia, being and called a actually, that. you in going a developed with help markets that sorry, and

Mike Hsu

the I’ll on and D&E, can with maybe Nelson the on you top in Andrea, bridging Maybe start soften. come then the back D&E Okay. it line. did yes,

challenges were I in in you quarter. to Southeast was plus XX% and QX talked So about the what call would as X% it we I discrete I then would already in up due about fourth think Andrea, Asia. say, primarily

approaches our business great doing business So is, we’re brand. prefer. we’re working through what great business, it’s about some we would in I we’re excited say Indonesia, that

way. a year. And the so way, certain that’s had an I of prefer to effect different a did do things them They

kind an and increased that. a And then little we’re of so the in And we’re seeing through on that through beyond Indonesia, competition India. sales quarter. And working Vietnam we’re impact that. had in Hopefully just

now. for And through so to been something we’re and that’s going on that years a off and going couple work

Middle Africa America was and Beyond East and for us. Southeast was mid-single-digit the Latin double-digits. up in China XXs, Asia, up up was

So, have give a executing about D&E do into overall, coming performance but we price feel enough this on we’re the our programming innovation markets, team bit our we’ve talked you we commercial about work in still overall which bringing we very great D&E? feel driving to recognize Asia. great still, the good a job Southeast that little mean, doing of and year. these for about execution, I is the Does

Andrea Teixeira

or takes in as the stronger North embedded I elasticities is kicking was fourth developed markets quarter. on the for I subdued your because at you in in puts what just the I’m guidance? it No, know year and in America Because this assuming are Yes. North from guess least if, thinking America, though, seems growth of

there hoping – as you is pricing embedding took you and is XXXX? more puts and takes to what see if So any are what into

Mike Hsu

across well, markets Yes, performance in fourth just quarter. we great developed let had say, me the

X%, significant mostly generally, markets if by pretty think developed inventory differences. up, on label and I We U.S. or contract approaching in at promotion that outside changes retail a changed private was was a tissue timing U.S. up I a exited a I exited add driven as pretty big you care significant. personal the about mentioned, double-digit retailer. think We was

developed and But plans say North in overall each that think specifically fourth very good would excited the so on quarter America expecting putting we’re number in affected of out I segments, going overall, the but performance the internationally And about don’t both there we these U.S. too. markets I continued and there a are

Nelson Urdaneta

It’s I pretty things and got top-line strong couple pipeline all well. developed through. markets, that’ll strong the very the for year I’d it. deconstruction innovation mean, think a to of back how I on highlight we’ve to come innovation think the But your about like as to going of

the important and the muted. one, we North more fact first important America that label we go the through will foremost, in talked it’s And it’s that we that when more the now. to about take half to first note As will be just exit say account muted, we of private the lap year, as year we into still –

that’ll is we’re from strong comps very the last bit the half. also other to impact first lapping year. in So then us And continue

grew grew we first half. in the X% and XX% half in we remember, you As the second

the then a And is we because have will of third through coming basis first is, that on in the a of half point the lot pricing carryover. year-over-year still

ease, of pressure reasons that expectation. And the because as go into think second all about the would Andrea. on So I the first would of would year, half we put as volumes, we it, our that and of the the together put those part year, that’s then of way think that that’s three

Andrea Teixeira

helpful. That’s

in one-third have one implies two-thirds of plan? like I another the it’s you pricing plan, terms the, as I’m about when so that that’s it two-thirds come pricing wrong, in you clarification –correct if the of of you on have that through understood, is Just everything me to said in carryover, missing

Mike Hsu

maybe since And over we’ve pricing last Yes. but carries I then still And year launched Steve, actions taken I into portion significant can’t of was remember, with said have a then. it earlier, year. additional yes, we that was pricing carryover this that

pricing we’ve are so generally markets across effect quarter. taking And this that an actions announced

in so And plan. the factored that’s also

Nelson Urdaneta

the QX. Yes, of into markets effect end at in they go biggest the

Mike Hsu

additional Yes, that, typical Steve, have in as I RGM growth of actions we to and [ph]. Evergreen that are then or management more actions revenue top on said

Nelson Urdaneta

hyperinflationary markets. Like

So as overall where, we number. pricing the of part that have

Andrea Teixeira

Thank I it the you pass clarification. helpful. all. Super for

Mike Hsu

Okay. Andrea. Thank you,

Operator

next We’ll take with from question Lauren our Lieberman Barclays.

Mike Hsu

Lauren. Morning,

Lauren Lieberman

Thanks. morning. Good

talk about North want elasticity. So in America to behavior a consumer and little bit

make sure elasticity assumptions it to I So, America for you’re inventory one number, on around business. care first North us give if not personal label personal a destocking, less on like rough exit going looks a one is some guess I’m I and of care, the than but private kind the

all your So behavior, the of shared What data just the has few how shares great, over perspective last trade the been a in terms and losing is seeing look on years. share much that but softer. of private knowing overall, bit kind looks of premium innovation because on of market down label curious you’re little not your your labor brand

start that consumer There volume when to there’s it there that the a tissue, But are to timeline kind And of there trade is elasticity. expect you there that of Should stabilizing? persist? think on significant the to then Or much in is. that terms always the under would just obviously we as lap seeing so price space be down about stabilizes? duress that you for and what

Mike Hsu

to volume would phone overall, consumption me And you here’s sales with I reflect night so Nielsen working and couple POS and things. One, I America expectations. Lauren, essential as Generally, and resilient North this, consumer. in our were or think is were so through last of let a as anyways and nature you knew ask does line where globally the I we’re the categories. POS on Russ our this, the so going know, Okay, just say I a say seeing that in

some has our a As these just shipment worked because volatility through. been little of of mentioned, discrete I higher items that we’ve

couple definitely thing little the were say volume This or I that bit Russ the and And was than I elasticity But the I half. half looking elasticity And reflect not second being higher last QX, essential. us. numbers and public so they’re And not these diapers But in so throw up the volume brand of I’ll was would what’s a remains, below in on is at slightly right, Eq, our anyways, pricing of three. higher observed a first category would X% far you. think units, as say nature are the and impact numbers, the down night. I modeled. equivalent does was measure in was proprietary at categories

below And think elasticity implied point far you certainly impact to out, as so one. the less, one therefore, I is

all top made categories. lot there half would I us of of in our have changes a these that competitors the across count second throw that on thing The in is and

almost right? it’s standard related count venture Eq so and to the guess so on half changes. unit, the a count count based decline sheet definition of And is to includes my reductions because tissue And volume

and for that be four was And for count price factor was recognize, the or was is to might changes. up sheet points in, volume XX three quarter of that then So likely the seven fourth the and diapers bath down I category seven. tissue, yes,

then – fourth seems second delta, What kind the numbers. And was high first be the and up right I was think increased to digit in to. were – Is like eight half, care those to half. because, slightly pricing then we up, elasticities adult And up and was still the reason and of continue in outlier volume the price has impact volume all mid quarter the say of up. I up the single the

is And difference. a so there

I I category. the environment is still the I essential consumer, there of think remains think but consumer of more different. was category the nature do because very pressure on resilient the the think

pause I’ll that Is So Lauren. there, answer?

Lauren Lieberman

the was you performance. one Yes, share that the piece that And missed market is great. relative just

Mike Hsu

Oh, yes.

Lauren Lieberman

In personal care any and mix of kind [indiscernible]. dynamics

Mike Hsu

about again, in feel we down an XX% one Diapers think, year. retailer was us. performance. the Yes, almost this in – double shifted that we’re label a minor private one behind of we year overall up care, I event good driver prior QX were Feminine large we QX up bigger quarter. year, private five. And the care, was consumption digits. was we At have biggest exit into of very last that, from brands, adult a for knowingly that But the the

from top which about that. of So lost had On event, big a QX and private to we QX. that planned label they we for. know that, And moved

of think us. and And share double cycle impact that for there’s I quarter. October, for a that the majority So happened the whammy side, our the on share in the accounted in

we later so we stand. from where about performance saw great quarter, feel certainly, the we in Huggies And better and

you, have told we this I And as – Disney is the XXX.

about. characters visit – well, So really hate got you that our [ph] poop us, come say, war our on to but we’re excited when we’ve take We’ve our with great you programs innovation on we’ll commercial products. and room for I great got to out superiority.

about offering so, feel to And what doing good we and very going we’re our but be there.

Lauren Lieberman

the I poop mean, agenda I XXXX. have for my I’m superiority going put visit. to

Mike Hsu

know sounds funny I call. it the in. on I’m This is a business

Lauren Lieberman

those then get Yes, seemed relative the jump I wage it. no, a I it. modeling versus gross on how if the I well briefly the headwinds question. just timed you like FX called OpEx, inflation we be as in unfortunately. just through that any to remiss then margin on terribly treat what just got out, like And pieces? But I’d didn’t And to work hedges not dimensional just

Nelson Urdaneta

Yes.

would little as a earnings, little mark-to-market other of margin. gross but and of on the on currency, And in model in assets any lion have a bit bit the because or liabilities translation share on it foreign we be gross there’s million of portion of the meaningful is the Forex, gross So, terms you margin in XXX a There’s the costs. That’s margin. it. be would operating – it all of

Lauren Lieberman

Okay. Great. you All much. Thank right. so

Mike Hsu

Lauren. Thank right. All you,

Operator

next Escalante with Javier take We’ll question our from Evercore.

Mike Hsu

good Javier, morning.

Nelson Urdaneta

Javier. Hi,

Javier Escalante

question. Hi. would come back elasticity like to Good morning, everyone. I to this

that also to is makes growth branded the mentioned competitor So volume how I’m what your market growth how to itemized us, concern levels what incontinence keep have of decline, elasticity X%, you X% down versus volume underlying you see of the this are healthier, and – just it’s if yet my So volume mentioned is think volumes mid- this or at happening that, is that the you what in tell these other growth? saw your better, contradiction given give underlying high-single-digit but us going Because sure were so without much can is we you but that could declines? you that X%. volume much how the this between one-timers? can And decline you pricing diapers,

Mike Hsu

us. through a X%. between in consumed, said North I consumers and versus think the probably thing for listen of I shipments, think right? There’s what’s our difference businesses, a call, so so other that what’s And the is picture And maybe consumption difference sold-through supposing in between I’m effects – America didn’t I lived that’s business have quarter, get our right? think same right? Care mean, consumption, some Javier, there’s I Yes. in the also Personal across to by you as they their to what’s but to I the what happening happening manufacturer; I And grew

grew Our business X%. by tissue

one, some did did to for exit business. as aspect us you’ll right? quarter, what the over of added is we But a think relates In to generally, health kind In retailer it inventories the we grow agree as have see significant run, equal in at going other right? the that’s inventories which changes the which you’re look biggest I it the discrete impact that or pretty shipments of to ongoing of the you’ll the retailer hopefully, the probably deplete us inventory, label run – as of consumption, long So long is the for should a kind contract, retail not well. perpetually So I private time, particularly eventually quarter. piece in

normally I us, retailer in inventory general, items, So for the see. discrete typical question, and those for said it’s about are on what changes we an earlier

elasticity. – and changes year-to-year, elasticity. back that’s of why inventory with goes consume retailer consume And what’s I what’s back right, happening I and happening to dollars, over it don’t representative and time. to and from And tends what’s volume as so to as view so build itself view up forth it happening to

Does that sense? make

Javier Escalante

Yes, more, you I quantified couldn’t not have but agree those one-timers.

you... asking I’m what you think me, what for is So underlying you do to category tell growth is

Mike Hsu

Well...

Javier Escalante

and competitor much year. are branded increases you price we And from taking carryover can inclusive ...the this to pricing comes whatever are wonder keep it? and of label too whether private addition about because to you in talking what extent you

Mike Hsu

category Well, all underlying in the I’ll care and growth say is quarter for the tissue. personal fourth was X% both

Javier Escalante

Mike, the referring not explain of volume volume, if could declines to volume about pricing. you compliance? what I’m X%, underlying So

Mike Hsu

decline was shipment volume and the consumption the that’s – then low- volume to low-single-digit Yes, decline mid-single-digit.

Javier Escalante

ahead. Go

Nelson Urdaneta

the Javier, one-timers. have on the we been to about going points question have that you have question one-timers, the would answer to back X your –

contract you would If been that out if of destock, inventory private the you label of think set. that have points about the X of think

Javier Escalante

in it the does role question that strategic on you. see diapers, Excellent. sense private What label a operations label. Europe? extent it private hold make Thank And And and U.S. what more, when the have comes then to do to I a you in in to both to your U.K.?

Mike Hsu

the our ago. Yes. We XX business years Personal our diaper exited primarily, about business U.K. in especially Care

you’re referencing sure I’m there. what So not

Javier Escalante

business well? the tissue Andrex, as

Mike Hsu

market I question? have What’s a we leader great the have U.K. the tissue yes, It’s mean, business. Yes. in the yes, – we

Javier Escalante

given is us which in whether label the the you. makes tell versus the can in have the access the to Thank personally and how have, if U.S. hold don’t we I tissue U.K., there? private question to is operations it sense pricing you onto The U.K. don’t situation

Mike Hsu

feel we continues U.S. about we’ve brands where their our it. Andrex and is. understand. we significant got as It the perform the price I has and this year. share. despite just grown Okay. yes, well have to done taken position in again, Hey, I pricing overall, great increases, it

consumers. in it’s leading brand so And United by much the and Kingdom a

for because of it’s us. year the this a cost so improvement for there’s room Certainly, all And pressure. great business

have of up the the said I here pre-pandemic, working towards the as that to the you’ve our so working back heard the done our is we’ve course And way been year. they were a had fantastic we’re that’s think so That our for of that. below our inflation us, offset that. still where And job priority teams are to recover over on significant we’ve margins all businesses and branded margins

Javier Escalante

much. very Very you helpful. so Thank

Mike Hsu

Okay. Javier. you, Thank

Operator

with We’ll Jefferies. our from Grundy last take question Kevin

Mike Hsu

Kevin. Hey,

Nelson Urdaneta

Hi, Kevin.

Kevin Grundy

then Hey. Mike, on together questions to Thanks and me congratulations, wanted U.S. maybe everyone. your Great. recent the how squeezing Christina, think the environment. and tie Hey, to Good of promotional was a which I I in, morning just promotional very specifically, getting I little some the hit bit, which bit. touched environment, this think at Javier, And Lauren for but out welcome. of share, plays market on a kind with more

the of it, Some categories? is now withstand investors stick, to is the going be your to able we with have with conversations particularly consumer of some pricing the in

still going targets, be it’s where of way cetera. on pulp in diapers, it oil, still share where eroded cetera. sure then, not quite benign what’s get tissue, et lost want et commodities but either to kind I’m not to obviously there’s more to some And your is wipes, you back go to a then margin retailers And long is gross on with categories,

recessionary in me. that’ll And benign what and categories, your So in how this environment, backdrop you Thanks you’ve playing question given more do may guys. outlook? commodity promotional and embedded just it then environment, your maybe around see the cost for out

Mike Hsu

me a the bit than quarter. diapers Kevin, in a on mean we’re share come me to is which out primarily the that then Okay. big which feel for happen big private big a we event, we to had so Lauren, softness I moving I and the softer and a in let market event had right told the in try reason on supply label I was impact Yes. let share. It with the mean, in was but one, I like confident that we QX, track. up. package start go

five the down it on of eight why get we categories in in right it, back we’ll I said QX, and were it’s upper, the but For we in year five were track. that’s even softened full QX,

in and I items in commercial confident nearly do feel working year about markets the think, America, all a really North across in world discrete I have around good international feel markets. we in and this our for then, plans few our we’re when activation

now the most manufacturers In But environment, environment pricing terms would right I would the of seen say overall competitive. promotion constructive, broad environment, actions pricing the categories. the remains across from I we’ve of, kind say given cost obviously

Promotion both that the that, personal I shallower and promotion while say returned in And than frequency happened, that’s bit normal related a of And a the I remains depth environment. to care. think has back. levels, tissue to would cost historical.

essential do certainly, the pressure. we under side, consumer the comments can the our my on elasticity of and notwithstanding, nature However, our, categories, consumers sense I on

the we so and working consumer top through and customers, so, wise. – we’re recognize talking that And is out been, to some pocketbook we’ve our challenges

And is that us across going a meet thing so, the and to to sure aim our continuing we’re our make offer And about need we’re to lead where them value our is, categories. strong business. us they

a premium both not premium. we’re We niche so play and across really, not And we’re to player. want value

for And the to Kevin. you’re continue we’ll are so support to and I taken answers and don’t make yes managing most exactly, have part, with do we pricing sure if consumers that. significant broad that. offering we we want our effectively know our along But what promotions we discipline a we have that looking for,

Kevin Grundy

But helps. kind the of should that you in categories just marketing. because potentially and from your on not points of tie marketing, think consumer trade pick up position, say in of intentions your that it’s that but you, to basis fair advertising a that I optimal, with, weaker the hundred with promotional to your is kind it environment and down a that view advertising in

fair it? year then way have the about to to you think bridge you you’ll when a reallocate If that there. get that trade cross that as to Is progresses, promotion

Mike Hsu

that there. say Yes. cross when get we yes, We’ll, yes, I’ll bridge we’ll

to, I ROIs we no, fan through because promotion business well can bias as personal my can, driving ROIs. advertising as on it I’m know a don’t have our trade I the we effectively, we know promotion. not You’ll – our do is of

ones And on the better. so and are returns, the like now both I advertising frankly, okay.

go-to. brand. And And long-term think the of health my so the I that’s better kind for it’s of

frankly, related question this And the Kevin, is to you’re asking.

they’re expect concerned Our their I shoppers. mean, it. customers value for about they

grow what And they’re fans so, for they’re but looking increases, the these we’re not that the bringing all make biggest part to sure of commercial from price of is long-term. us category to the for programming

they’re the our they’re about they’re And ideas bringing the, innovation about so, year. excited this we’re and excited that commercial

want they, they bring it. And us so to

And bigger so ticked we’ve the reason, in that’s advertising. probably the up investment our why

Kevin Grundy

time. Got it. Very all good Thanks the Good guys. luck. for

Mike Hsu

Okay.

Nelson Urdaneta

Thank you.

Mike Hsu

fulfill drive better confident I’m this long-term. things great a capabilities and shareholder Hey, care All I’m business, our in I’m just drive focus strength make purpose to the going commercial position the I’ll Kimberly-Clark of better our couple my Shelby, of our you, long-term talent say Thank brands closing right. Kevin. we’ll world. that our to in leadership business proud confident and value And comments. and a the really one, organization, of for for

you that, I today. And sign us off. to we’ll with all So thank want for joining

Operator

teleconference. your today’s That participation. Thank concludes you for

may You now disconnect.