Kimberly-Clark Corporation · NASDAQ:KMB
Kimberly-Clark — Investor Presentation (2016)
31 slides from Kimberly-Clark's investor presentation, May 3, 2016
Slide 1: Investor Presentation
Leading the World in Essentials for a Better Life Investor Presentation Financial Information as of December 31, 2015 www.kimberly-clark.com
Slide 2: Highlights
Highlights • $19 billion global company founded in 1872 • Products used by one-quarter of world’s population • Strong legacy of innovation – created 5 of the 8 major product categories in which we compete • Products sold in more than 175 countries • #1 or #2 position in 80 countries • Strong global
Slide 3: Our Values
Our Values Authentic: Our heritage is one of honesty, integrity and doing the right thing Accountable: We take ownership for our business and our future Innovative: Our commitment is to new ideas that add value Caring: We respect each other and care for the communities where we live and work 3
Slide 4: Commitment to Sustainability
Commitment to Sustainability A Trusted Brand…Yesterday, Today and Tomorrow • Sustainability 2022 (K-C’s 150th anniversary) is a commitment to: – Invest in social programs to help people who lack the basic essentials in life – Innovate to extend the life of product and packaging materials – Reduce pr
Slide 5: Senior Leadership Team
Senior Leadership Team Thomas Falk Lizanne Gottung Maria Henry Chairman and CEO Senior Vice President and Senior Vice President and Chief Human Resources Officer Chief Financial Officer Michael Hsu Sandra MacQuillan Thomas Mielke Group President of Senior Vice President, Senior Vice President Kimber
Slide 6: Three Global Segments
Three Global Segments Personal Care Consumer Tissue K-C Professional (KCP) • Diapers • Facial Tissue • Facial Tissue, Bathroom Tissue • Training/Youth/Swim Pants and Paper Towels for • Bathroom Tissue away-from-home use • Infant and Child Wipes • Paper Towels • Wipers • Feminine Care • Safety Produc
Slide 7: Geographic Breakdown
Geographic Breakdown 2015 SALES 50% 50% North America Outside North America 2015 OPERATING PROFIT 2015 OPERATING MARGIN 23% 39% 14% 61% 7 Operating profit and margin exclude corporate and other (income) and expense, net.
Slide 8: Global Business Plan (GBP)
Global Business Plan (GBP) • GBP is our strategic plan that prioritizes growth opportunities and applies greater financial discipline to our operations – Launched in mid-2003 and designed to generate sustainable growth and improved shareholder returns Manage portfolio to Invest in brands, balance gr
Slide 9: GBP Objectives and Results
GBP Objectives and Results Annual 2004 – 2015 Improvement CAGR Objective Sales 3 to 5 percent 3 percent Organic Sales 3 to 5 percent 4 percent Mid- to high- EPS* 6 percent single digits 20 to 40 ROIC* 75 basis points basis points Dividend In line with EPS 8 percent 9 * EPS and ROIC are adjusted.
Slide 10: Delivering Consistent Organic Sales Growth
Delivering Consistent Organic Sales Growth • Targeted growth initiatives ORGANIC SALES GROWTH • Innovations 5% 5% 4% 4% • Marketing investments 3% • Portfolio improvements • Price increases 2009-2011 2012 2013 2014 2015 (currency/commodity related) Avg. 10 10
Slide 11: Improving Margins
Improving Margins • Organic top-line growth GROSS MARGIN* 35.9% • Significant cost savings 34.1% 34.3% 33.4% 30.9% • Strategic changes / restructuring 2011 2012 2013 2014 2015 • Efficient SG&A spending OPERATING MARGIN* 17.3% 16.1% 15.4% 14.4% 13.5% 2011 2012 2013 2014 2015 11 * Adjusted.
Slide 12: Business Unit Strategies
Business Unit Strategies PERSONAL Win globally in Personal Care CARE CONSUMER Deliver targeted growth and improve TISSUE margins in Consumer Tissue K-C PROFESSIONAL Grow in higher margin segments in KCP Drive rapid growth in Developing & Emerging D&E MARKETS Markets (D&E) – Focus on China, Eastern E
Slide 13: Win Globally in Personal Care
Win Globally in Personal Care • Leverage strong brands • Innovation supported by integrated marketing campaigns • Long track record of success – 12-year organic sales CAGR: +6 percent PERSONAL CARE SALES % OF TOTAL COMPANY 50% 39% 2003 2015 13
Slide 14: Deliver Targeted Growth and Improve Margins in Consumer Tissue
Deliver Targeted Growth and Improve Margins in Consumer Tissue • Launch value-added innovations • Focus on net realized revenue, mix, cost reduction • Excellent progress with margin improvement • Operating profit up 60+ percent over last 5 years OPERATING MARGIN 18% 16% 15% 14% 11% 2011 2012 2013 20
Slide 15: Grow in Higher Margin Segments in KCP
Grow in Higher Margin Segments in KCP • Provide essentials for a healthy, SALES GROWTH (2010-2015 CAGR Index) safe and productive workplace • Invest in high-growth, higher 2.4x margin Safety & Wiper businesses 1.0x • Focus on improving mix and KCP Wipers & margin to fund growth Segment Safety TOTAL
Slide 16: Drive Rapid Growth in D&E Markets
Drive Rapid Growth in D&E Markets • Excellent performance over last five ORGANIC SALES GROWTH* years 12% 12% 11% 10% 10% – Double-digit organic sales growth – Improved operating margin • Strong market positions 2011 2012 2013 2014 2015 • Attractive market dynamics • Multi-tier product strategies D&E
Slide 17: D&E Focus Areas: China, Eastern Europe, Latin America
D&E Focus Areas: China, Eastern Europe, Latin America • Approximately 75 percent of D&E ORGANIC SALES GROWTH* business 15% 14% 13% 12% • Innovation in all markets 11% • Selling and marketing investments • Focused distribution expansion 2011 2012 2013 2014 2015 • Increasing manufacturing base to supp
Slide 18: Personal Care in D&E Markets
Personal Care in D&E Markets • Delivering consistent double-digit ORGANIC SALES GROWTH* organic sales growth 15% 14% 14% 12% 12% • Personal Care in D&E now nearly as large as North America • Leveraging strong brands, innovations 2011 2012 2013 2014 2015 and favorable market demographics • Driving ma
Slide 19: KCP in D&E Markets
KCP in D&E Markets • Approximately three-quarters ORGANIC SALES GROWTH IN D&E MARKETS* billion dollars in annual sales; 13% 12% 12% excellent margins and growth 10% opportunities 6% • Expanding where industrialization and economic development are 2011 2012 2013 2014 2015 occurring – Including Latin
Slide 20: Recent Portfolio Changes
Recent Portfolio Changes • Pulp & Tissue Restructuring (2011 – 2012) – Exited remaining integrated pulp operations; streamlined tissue manufacturing; $100 million cumulative operating profit benefit • European Strategic Changes (2012 – 2014) – Exited diaper category in most of Western/Central Europe
Slide 21: 2014 Organization Restructuring
2014 Organization Restructuring • Announced October 2014 RESTRUCTURING SAVINGS • Will offset impact of stranded overhead ($ MILLIONS) costs from health care business spin-off $120 - $140 and improve efficiency – More flexibility to invest – Further evidence of cost discipline $70 • Restructuring cos
Slide 22: Investing For Growth – Advertising
Investing For Growth – Advertising • Supporting innovation and building brand equity • Marketing in a digital world – non-traditional channels and programs • Improving efficiencies • Significant increase since 2009 ADVERTISING SPENDING ($ MILLIONS) $710 $559 3.8% 2.9% NSV NSV 2009 2015 22
Slide 23: Sustainable Cost Reduction – FORCE
Sustainable Cost Reduction – FORCE* • Ongoing program ANNUAL SAVINGS ($ MILLIONS) – Delivered $2.9 billion over past 12 years $365 – Accelerated performance in $310 recent years • Supply chain focus – Global procurement organization $200 – Lean manufacturing practices – Product cost design • Created
Slide 24: Working Capital Improvement
Working Capital Improvement • Strong improvement since PRIMARY WORKING CAPITAL 2008 CASH CONVERSION CYCLE (DAYS) – Extending payables terms – Inventory management 73 – Health care spin-off (67%) • Expect continued progress going forward – Building further capabilities • Targeting 1 to 2 day 24 impro
Slide 25: Return on Invested Capital
Return on Invested Capital • Key component of long-term ROIC* incentive compensation program • Excellent progress since GBP 22.7% introduction • Expect additional improvement 13.7% in 2016 2003 2015 25 * Adjusted.
Slide 26: Capital Allocation Strategy
Capital Allocation Strategy • Maintain ‘A’ credit rating and balance sheet flexibility • Fund business needs (growth, innovation, cost savings) – Capital spending 4.5 to 5.5 percent of net sales • Grow dividend – Top-tier payout in Consumer Packaged Goods industry • Consider M&A – Not core part of g
Slide 27: Dividends
Dividends • Top-tier dividend in CPG industry • Announced 5 percent increase for 2016 dividend – 82nd consecutive year K-C has paid a dividend, 44th consecutive annual increase • Paid $12+ billion in cash dividends over past 12 years PER SHARE DIVIDEND DIVIDEND PAYOUT* (DECLARED) $3.52 61% 41% $1.36
Slide 28: Share Repurchases
Share Repurchases SHARES OUTSTANDING (MILLIONS) • Cumulative share repurchases of $14.6 billion 502 2004-2015 • Strong track record of reducing share count (28%) • Targeting $600 million to $900 million in 2016 361 Year-end Year-end 2003 2015 28
Slide 29: Total Shareholder Returns Since Launch of GBP (July 2003)
Total Shareholder Returns Since Launch of GBP (July 2003) 296% 300% 249% 250% 200% 171% 150% 100% KMB S&P 500 S&P Consumer Staples Index 29 Total Shareholder Returns through December 31, 2015 – assumes reinvestment of dividends.
Slide 30: To Learn More About Kimberly-Clark
To Learn More About Kimberly-Clark • Contact Investor Relations with your questions – Paul Alexander, Vice President at (972) 281-1440 • Visit www.kimberly-clark.com/investors to view our annual report, SEC filings or news releases • To obtain copies of our 2015 Annual Report on Form 10-K, SEC filin
Slide 31: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Information Certain matters in this presentation, including our 2016 outlook, expectations and planning assumptions, and any estimates, projections, and statements relating to our business plans, strategies or objectives, constitute forward-looking statements an