Business

Kimberly-Clark Gears Up for Robust Growth and Sustainable Transformation

DALLAS, March 27, 2024 /PRNewswire/ -- The Kimberly-Clark Corporation (NYSE: KMB), a global leader in personal care products, today declared a bold new phase in its strategic evolution. Mike Hsu, the company's esteemed Chairman and Chief Executive Officer, together with his executive leadership team, rolled out an ambitious new operating model and strategic commercial plans intent on propelling the company's prominent brands to outpace the growth of their respective sectors.

Mike Hsu astutely remarked, "The collective commitment and excellent performance of our global team over the last half-decade have uniquely prepared us to exploit the impressive scale we've established, and now launch Kimberly-Clark into an exciting period of expansion. With a history that spans over 150 years of pioneering achievements, converting innovative insights into trailblazing products, we are well poised for the journey ahead—delivering consistent, far-reaching value creation."

Extending on these thoughts, Hsu articulated, "Science and innovation comprise our core competitive edge, driving our capability to meet the dynamic needs of today's consumers. At the heart of Kimberley-Clark's strategy is our commitment to sustainability, and we are thrilled to announce our commitment to a future where our products are 100% Natural Forest Free. We are set to be over halfway towards achieving this significant milestone by 2030."

The Next-Generation Kimberly-Clark Operating Model

In its persistent endeavor to bring about a radical improvement in performance, Kimberly-Clark has honed its strategic focus with the introduction of a fresh operating model energized by three synergistic forces:

1. Enhancing Trailblazing Innovation: Recognizing the substantial opportunities for growth within its product categories, Kimberly-Clark intends to double down on investments in science and technology to cater to consumer needs that have yet to be met. This initiative will center around fostering the growth of 12 leading brands that command dominant market positions and represent over 80% of the company's net revenues. These brands span five vital, daily-need product arenas including Baby & Child Care, Feminine Care, Adult Care, Family Care, and Professional services—all part of a $240 billion global market.

2. Streamlining Margin Structure: The company is poised to refine consumer offerings throughout the pricing spectrum. The aim is to introduce initiatives and deploy state-of-the-art data analytics and technology, thereby fostering a supply chain that's faster, more integrated, and highly flexible. This modernization is poised to yield over $3 billion in productivity savings and about $500 million in working capital enhancements—resources that will back further growth investments.

3. Cultivating Organizational Growth: The goal is to inject agility and quickness into the company's operational DNA, extending its competitive edge further. In doing so, the company will undergo a restructuring into three focused business segments—North America, International Personal Care (IPC), and International Family Care and Professional (IFP). Each of these segments will drive growth while realizing the benefits of an enhanced operational focus, tailored investment strategies, and unified technology platforms.

Unveiling Efficient Business Segments

• North America: This segment comprises an $11 billion sales business with a noteworthy 23% operating profit margin. It will capitalize on its considerable scale to maximize value generation, spearhead a comprehensive cost transformation, and swiftly innovate to meet consumer demands across its 11 powerhouse brands.

• International Personal Care (IPC): Accounting for roughly $6 billion in annual sales, IPC will concentrate on three major categories—Baby & Child Care, Feminine Care, and Adult Care. The model envisages driving robust growth through scaling successful growth models, with strategic investments in five core markets comprising 60% of segment sales. Furthermore, in the remaining 50 enterprise markets, the company will focus on enhancing growth trajectories and returns by streamlining market approaches and harmonizing product assortments.

• International Family Care and Professional (IFP): This $3.5 billion sales segment will merge the international consumer tissue business with the international professional division. The focus here is on improving profitability by nurturing six iconic brands across important markets while leveraging shared technological platforms for more efficient deployment.

Supporting these segments are finely-tuned, best-in-class functions such as Research & Development, Marketing, Finance, Information Technology, and Human Resources. Kimberly-Clark envisages the completion of the reorganization by the end of 2024, anticipating this to bring approximately $200 million of administrative cost savings to be reinvested in business growth.

Commitment to a 100% Natural Forest-Free Future

Addressing sustainability, the company is looking to enhance consumer benefits while achieving more excellent environmental responsibility across product development. With a considerable investment in exploring alternative fibers over the past ten years, Kimberly-Clark has stepped up, declaring its ambition to achieve 100% Natural Forest Free across its extensive product range, setting a strategic milestone to be well on its way towards this goal within the next decade.

Aspiring for Long-Term Growth and Sustained Returns

Kimberly-Clark has delineated a series of long-term growth and return goals, each meticulously crafted to underline the company's unwavering interest in bolstering shareholder value through:

• Leading the charge with organic net sales growth that eclipses general market expansion;
• Cultivating an adjusted operating profit surge in the mid-to-high single-digit range on a constant currency basis;
• Boosting an adjusted earnings per share (EPS) also in the mid-to-high single digits on a constant currency basis;
• Achieving an annual generation of free cash flow of no less than $2 billion.

Nelson Urdaneta, the company's Chief Financial Officer, conveyed confidence in the company's strategic direction, citing, "We see a clear roadmap to sustaining growth and substantial margin improvements by honing our competitive strengths and capitalizing on critical market positions, combined with vigorous innovation and market delivery capacities."

Kimberly-Clark continues to prioritize capital allocations to underpin organic growth, sustaining its market lead with strong yield potential. These include increasing dividends in line with its single-A credit rating, scouting for strategic acquisitions that offer additional growth and returns, and utilizing residual capital for share repurchases to counteract equity incentive programs' dilution.

The company projects around $1.5 billion in one-time costs related to restructuring, with these expenses set to be incurred over the upcoming three years as part of the reform plans.

A Clear Vision for 2024

Kimberly-Clark's 2024 perspective remains aligned with its new long-term growth strategy and profitability goals. The company anticipates a low-to-mid single-digit percentage hike in 2024 Organic Net Sales compared to the previous year. Expected influences on reported net sales include adverse impacts from currency translation and the Brazil Tissue divestiture. Adjusted operating profit is projected to climb at a high single to low double-digit rate, with adjusted EPS also expected to rise, although the war in Ukraine and other varying global economies may contribute to adjustments.

2024 Investor Day Showcase

On this day, Kimberly-Clark exhibited its Investor Day presentations in New York City, which commenced at 9 a.m. Eastern Daylight Time. The event, ade()<<"UNIQ--nowiki-000000F5-QINU">>quately displaying the company's future-oriented vision, was also webcasted and available on the company's website, where a replay of the event and the associated presentations will be accessible for those unable to attend.

Kimberly-Clark's Event & Presentations

About Kimberly-Clark

Pioneering innovation for more than a century and a half, Kimberly-Clark (NYSE: KMB) and its trusted brands are inseparable from the daily lives of people in over 175 countries. With creativity and a deep understanding of people's fundamental needs, Kimberly-Clark's brands—including Huggies, Kleenex, Scott, and many more—consistently lead the market in numerous countries. The company's devotion to sustainable practices, robust community support, and enduring business success is why it has been honored as one of the World's Most Ethical Companies® by Ethisphere for the fifth consecutive year. To learn more about Kimberly-Clark's rich history and ongoing innovation, visit kimberly-clark.com.

Forward-Looking Statements

The contents of this release, reflecting management's expectations and beliefs regarding future financial and operational performances, constitute forward-looking statements. However, these statements are contingent upon unpredictable factors including operational risks, global economic conditions, fluctuations in currency exchange rates, and market instabilities. Therefore, Kimberly-Clark is not positioned to guarantee that anticipated outcomes will materialize. For a detailed analysis of potential risks that could affect the company's future results, please refer to "Risk Factors" in its Annual Report on Form 10-K.

Embracing Non-GAAP Financial Metrics

Kimberly-Clark's financial dialogue frequently references non-GAAP financial measures such as Adjusted Operating Profit, Adjusted EPS, and Free Cash Flow. These metrics, which exist outside conventional GAAP, offer a different perspective on financial outcomes. The company, given the unpredictability of certain adjustment items, does not reconcile these forward-looking non-GAAP metrics to the most directly comparable GAAP metrics. Such items, due to their potential significance, merit consideration in understanding Kimberly-Clark's financial positions.

The company also highlights organic sales growth figures, outlining the impact of volume, pricing dynamics, and product mix on net sales, and how these are affected by changes in foreign currency exchange rates, acquisitions, and business divestitures.

Kimberly-Clark's Epilogue

The advancement of Kimberly-Clark stands testament to a company that's not merely sustaining but is actively rewriting the rules of growth, sustainability, and innovation in the personal care industry. Its transformation initiative, devoted leadership, and clear financial objectives align to steer Kimberly-Clark toward unprecedented success, ensuring their legacy endures for generations to come.

Kimberly-Clark Logo Image

SOURCE: Kimberly-Clark Corporation

With foresight, innovation, and unwavering dedication to sustainability and growth, Kimberly-Clark Corporation moves confidently into the future, setting new industry standards and offering shareholders a vision of continuous and responsible value creation.