Investor Presentation

Transcription

1 Leading the World in Essentials for a Better Life Investor Presentation Financial Information as of December 31,

2 Highlights $20 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 brands, including five billion-dollar brands: 2

3 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

4 Commitment to Sustainability A Trusted Brand Yesterday, Today and Tomorrow Sustainability 2015 vision built around a framework of People, Planet and Products Engage with people to build enduring relationships Respect our planet and conserve its resources Deliver quality products today and for generations to come Visit for information on our sustainability strategy and performance 4

5 Senior Leadership Team Thomas Falk Chairman and CEO Mark Buthman Executive Vice President* Lizanne Gottung Senior Vice President and Chief Human Resources Officer Maria Henry Senior Vice President and Chief Financial Officer Michael Hsu Group President of Kimberly-Clark North America Sandra MacQuillan Senior Vice President, Global Supply Chain Thomas Mielke Senior Vice President and General Counsel *Will be retiring at the end of Anthony Palmer President of Global Brands and Innovation Elane Stock Group President of Kimberly-Clark International Kim Underhill President of Kimberly- Clark Professional 5

6 Three Global Segments Personal Care Consumer Tissue K-C Professional (KCP) Diapers Training/Youth/Swim Pants Infant and Child Wipes Feminine Care Incontinence Care Facial Tissue Bathroom Tissue Paper Towels Facial Tissue, Bathroom Tissue and Paper Towels for away-from-home use Wipers Safety Products 2014 NET SALES 2014 OPERATING PROFIT 2014 OPERATING MARGIN 17% 17% 34% 49% 31% 52% 19% 16% 18% Operating profit and margin exclude corporate and other (income) and expense, net. 6

7 Geographic Breakdown 2014 NET SALES 46% 54% North America Outside North America 2014 OPERATING PROFIT 2014 OPERATING MARGIN 21% 58% 42% 14% Operating profit and margin exclude corporate and other (income) and expense, net. 7

8 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 GBP strategies Manage portfolio to balance growth, profitability, cash flow Invest in brands, innovation, growth initiatives Deliver sustainable cost reduction Disciplined capital management to improve ROIC and return cash to shareholders 8

9 GBP Objectives and Results Annual Improvement Objective CAGR Net Sales 3 to 5 percent 4 percent EPS* ROIC* Mid- to highsingle digits 20 to 40 basis points 6 percent 50 basis points Dividend In line with EPS 9 percent * EPS and ROIC are adjusted. 9

10 Business Unit Strategies PERSONAL CARE Win globally in Personal Care CONSUMER TISSUE Deliver targeted growth and improve margins in Consumer Tissue K-C PROFESSIONAL Grow in higher margin segments in KCP D&E MARKETS Drive rapid growth in Developing & Emerging Markets (D&E) Focus on China, Eastern Europe and Latin America D&E = K-C s business in Latin America, Eastern Europe, the Middle East and Africa, and Asia-Pacific, excluding Australia and South Korea. 10

11 Win Globally in Personal Care Leverage strong brands Win with consumers by providing superior innovation supported by integrated marketing campaigns Long track record of success 11-year organic net sales CAGR: +6 percent PERSONAL CARE NET SALES % OF TOTAL COMPANY 49% 39%

12 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 MARGIN 10% 11% 14% 15% 16%

13 Grow in Higher Margin Segments in KCP Provide essentials for a healthy, safe and productive workplace Invest in high-growth, higher margin Safety & Wiping segments NET SALES GROWTH ( CAGR Index) 1.0x 2.8x Focus on improving mix and margin to fund growth Washroom Wipers & Safety TOTAL KCP OPERATING MARGIN 15% 18%

14 Drive Rapid Growth in D&E Markets Excellent performance over last five years Double-digit organic sales growth Improved operating margin Strong market positions Attractive market dynamics Multi-tier product strategies Targeted geographic expansion and growth plans 7% Net Sales CAGR 10% Organic Net Sales 9% Operating Profit D&E NET SALES % OF TOTAL COMPANY 14% 33%

15 D&E Focus Areas: China, Eastern Europe, Latin America Approximately 75 percent of D&E business CAGR Innovation across all categories Selling and marketing investments China business expanding into more cities and product tiers 8% 12% 11% Expansion opportunities in Eastern Europe and Latin America also Increasing manufacturing base to support growth, improve profitability Net Sales Organic Net Sales Operating Profit Emphasis on Personal Care and KCP 15

16 Personal Care in D&E Markets Five-year organic net sales CAGR: +12 percent Personal Care in D&E now nearly as large as North America Leveraging strong brands, innovations and favorable market demographics Driving market development, penetration and frequency of usage Making adult care and baby wipes businesses more global ORGANIC NET SALES GROWTH 12% 15% 12% 15% 6% D&E % OF TOTAL PERSONAL CARE NET SALES 41% 18%

17 KCP in D&E Markets Approaching $1 billion in annual net sales; excellent margins and growth opportunities Double-digit growth in organic net sales and operating profit over last five years Expanding where industrialization and economic development are occurring CAGR 12% 10% 9% Including Latin America, Eastern Europe and China Net Sales Organic Net Sales Operating Profit Leveraging global brands, go-tomarket capabilities and sustainability leadership 17

18 Recent Portfolio Changes Pulp & Tissue Restructuring ( ) Exited remaining integrated pulp operations; streamlined tissue manufacturing; $100 million cumulative operating profit benefit European Strategic Changes ( ) Exited diaper category in most of Western/Central Europe and some other lower margin or slower growing businesses 2014 consumer business margins up 300 basis points versus 2012 Health Care Spin-off Creating Halyard Health, Inc. (2014) Allows Halyard to optimize performance and flexibility to pursue value-creation opportunities Further sharpens K-C s focus on growing consumer and KCP brands 18

19 2014 Organization Restructuring Announced October 2014 Will offset impact of stranded overhead costs from health care business spin-off and improve efficiency More flexibility to invest in brands, targeted growth initiatives, capabilities Anticipated workforce reductions 1,100 to 1,300 Expected financial impacts After-tax costs $130 to $160 million by end of 2016 Pre-tax savings $120 to $140 million by end of 2017 Further evidence of financial and cost discipline 19

20 Investing For Growth Advertising Supporting innovation and building brand equity Increasing use of non-traditional channels and programs Improving efficiencies Significant increase in spending in last five years ADVERTISING SPENDING ($ MILLIONS) $ % NSV $ % NSV

21 Sustainable Cost Reduction Ongoing program Delivered $2.5 billion over past 11 years FORCE SAVINGS ($ MILLIONS) Accelerated performance in recent years $295 $310 $320 Supply chain focus Global procurement organization $200 Lean manufacturing practices Product cost design Targeting at least $300 million in Avg

22 Working Capital Improvement Strong improvement since 2008 Improved accounts payable Inventory focus 73 PRIMARY WORKING CAPITAL CASH CONVERSION CYCLE (DAYS) Expect continued progress going forward Building further capabilities Targeting 3 to 4 day improvement in

23 Return on Invested Capital Excellent progress since GBP introduction ROIC* Key component of long-term incentive compensation program 19.1% Expect additional improvement in % * Adjusted. 23

24 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 growth strategy Return excess cash to shareholders via share repurchases 24

25 Dividends Top-tier dividend in CPG industry Announced 5 percent increase for 2015 dividend 81 st consecutive year K-C has paid a dividend, 43 rd consecutive annual increase Paid $11 billion in cash dividends over past 11 years PER SHARE DIVIDEND (DECLARED) $3.36 DIVIDEND PAYOUT* 61% 41% $ * Declared dividends per share divided by adjusted basic earnings per share from continuing operations. 25

26 Share Repurchases Cumulative share repurchases of $13.8 billion SHARES OUTSTANDING (MILLIONS) Strong track record of reducing share count Targeting $800 million to $1.0 billion in % Year-end Year-end

27 Total Shareholder Returns Since Launch of GBP (July 2003) 248% 227% 167% KMB S&P 500 S&P Consumer Staples Index Total Shareholder Returns through December 31, 2014 assumes reinvestment of dividends. 27

28 To Learn More About Kimberly-Clark Contact Investor Relations with your questions Paul Alexander, Vice President at (972) Visit to view our annual report, SEC filings or news releases To obtain copies of our 2014 Annual Report on Form 10-K, SEC filings or news releases, call (800)

29 Safe Harbor Statement Forward-Looking Information Certain matters in this presentation, including our 2015 outlook, expectations and planning assumptions, and any estimates, projections, and statements relating to our business plans, strategies or objectives, constitute forward-looking statements and are based upon management s expectations and beliefs concerning future events impacting the company. These statements are subject to risks and uncertainties, including currency rates and exchange risks, cost savings and reductions, raw material, energy, and other input costs, competition, market demand and economic and political conditions and the anticipated costs, scope, timing and financial and other effects of the 2014 organization restructuring. There can be no assurance that these future events will occur as anticipated or that the company s results will be as estimated. Furthermore, unless otherwise specifically indicated, forwardlooking statements contained in this presentation are based on our fourth quarter 2014 earnings communication which occurred on January 23, Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update any of these statements. For a description of certain factors that could cause the company s future results to differ materially from those expressed in any such forward-looking statements, see Item 1A of the company s Annual Report on Form 10-K for the year ended December 31, 2014 entitled Risk Factors. Non-GAAP Financial Measures This presentation contains some financial measures that have been adjusted to exclude certain items and differ from reported results using Generally Accepted Accounting Principles (GAAP). Management believes that reporting in this manner enhances investors understanding and analysis of the company s performance. Organic net sales exclude the impact of changes in foreign currency exchange rates and lower sales as a result of portfolio changes. For additional information on why we make these adjustments and reconciliations to comparable measures under GAAP, see the supplemental information posted to the Investors section of our website ( 29