Investor Presentation

Transcription

1 Investor Presentation Financial Information as of December 31, Leading the world in essentials for a better life

2 Highlights $18 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 Accountable Innovative Caring Our heritage is one of honesty, integrity and doing the right thing We take ownership for our business and our future Our commitment is to new ideas that add value We respect each other and care for the communities where we live and work 3

4 Commitment to Sustainability Sustainability 2022 (K-C s 150 th anniversary) is a commitment to: Improve social and physical well-being in communities around the world Harness innovations to reduce our impact on natural forests Increase our energy efficiency and use of alternative energy sources each year Set our sights on zero waste Build powerful partnerships to create a leading sustainable and responsible supply chain Read more about our sustainability strategy and performance at kimberly-clark.com/sustainability 4

5 Senior Leadership Team Thomas Falk Chairman and CEO Michael Hsu President and Chief Operating Officer Achal Agarwal President, Asia-Pacific Larry Allgaier Group President, Kimberly- Clark North America J. Scott Boston Senior Vice President and Chief Human Resources Officer Gustavo Calvo Paz President, Europe, Middle East and Africa Sergio Cruz President, Latin America Maria Henry Senior Vice President and Chief Financial Officer Sandra MacQuillan Senior Vice President and Chief Supply Chain Officer Jeffrey Melucci Senior Vice President and General Counsel Anthony Palmer President, Global Brands and Innovation Kim Underhill President, Kimberly-Clark Professional 5

6 Three Global Segments Personal Care Consumer Tissue K-C Professional (KCP) Diapers Training/Youth/Swim Pants Baby Wipes Feminine Care Incontinence Care $9.0 billion Facial Tissue Bathroom Tissue Paper Towels $6.0 billion Facial Tissue, Bathroom Tissue and Paper Towels for away-from-home use Wipers Safety Products $3.2 billion 2016 SALES 2016 OPERATING PROFIT 2016 OPERATING MARGIN 50% 17% 33% 52% 17% 31% 21% 19% 19% Operating profit and margin exclude corporate and other (income) and expense, net. 6

7 Geographic Breakdown 2016 SALES 52% 48% North America Outside North America 2016 OPERATING PROFIT 2016 OPERATING MARGIN 35% 24% 65% 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 Manage portfolio to balance growth, margin, cash flow Invest in brands, innovation, growth initiatives Deliver sustainable cost reduction Strategies Disciplined capital management to improve ROIC and return cash to shareholders 8

9 GBP Objectives and Results Sales Organic Sales Annual Improvement Objective 3 to 5 percent 3 to 5 percent CAGR 3 percent 4 percent EPS* Mid- to highsingle digits 6 percent ROIC* 20 to 40 basis points 80 basis points Dividend In line with EPS 8 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 Innovation supported by integrated marketing campaigns Long track record of success Organic sales CAGR +5 percent since launch of Global Business Plan PERSONAL CARE SALES % OF TOTAL COMPANY 50% 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 profit up about 45 percent over last 5 years OPERATING MARGIN 14% 15% 16% 18% 19%

13 Grow in Higher Margin Segments in KCP Provide essentials for a healthy, safe and productive workplace ORGANIC SALES GROWTH ( CAGR) Invest in high-growth, higher margin Safety and Wiper businesses 3% 9% Expand in D&E markets where industrialization and economic development are occurring Improve mix and margin to fund growth KCP SEGMENT KCP D&E MARKETS TOTAL KCP OPERATING MARGIN 17% 19%

14 Drive Rapid Growth in D&E Markets Excellent performance over last several years 2011 to 2015 organic sales CAGR: 11 percent 2016 organic sales growth 4 percent Market positions remain broadly healthy Optimistic about long-term potential Attractive market dynamics Significant opportunities to increase penetration and frequency of usage Targeted geographic expansion and growth plans D&E SALES % OF TOTAL COMPANY 14% 29%

15 D&E Focus Areas: China, Eastern Europe, Latin America Personal Care Approximately 50 percent of D&E business Organic sales growth 2011 to 2015 CAGR: 15 percent 2016: 5 percent (some category slowdown; diaper pricing in China) Continue to execute long-term growth plans Innovation Selling and marketing investments Focused distribution expansion Production capacity increases 15

16 Adult Care and Feminine Care in D&E Markets Excellent progress over last several years ADULT CARE ORGANIC SALES GROWTH Driving category development Leveraging well-known brands Launching steady stream of innovations 16% CAGR 12% 2016 FEMININE CARE ORGANIC SALES GROWTH 11% 9% CAGR

17 Marketing in a Digital World Supporting innovation and building brand equity Increasing use of digital / non-traditional channels More targeted communication 1x1 relationship with consumers More efficient reach Easier to track ROI Traditional advertising still has important role to play 17

18 Sustainable Cost Reduction FORCE Ongoing program Delivered $3.3 billion over past 13 years Performance has accelerated, including record savings in 2016 End-to-end supply chain focus Procurement, lean manufacturing practices, product design Global supply chain organization created in 2015 continuing to build capability $ Avg. ANNUAL SAVINGS ($ Millions) $ Avg. GROSS MARGIN* 35.9% $ % Important component of gross margin improvement 33.4% 34.1% 34.3% * Adjusted 18

19 2014 Organization Restructuring Announced October 2014; completed December 2016 Offset impact of stranded overhead costs from health care business spin-off and improve efficiency More flexibility to invest Further evidence of cost discipline Restructuring costs totaled $164 million (after tax) Cumulative annualized savings of $140 million Achieved savings target one year ahead of original commitment of $120 to $140 million by end of 2017 CUMULATIVE ANNUALIZED RESTRUCTURING SAVINGS ($ Millions) $5 $70 $

20 Working Capital Improvement Strong improvement since 2008 Extending payables terms Inventory management Health care spin-off Expect continued progress going forward Building further capabilities Global supply chain organization focus PRIMARY WORKING CAPITAL CASH CONVERSION CYCLE (Days) 73 (70%)

21 Return on Invested Capital Key component of long-term incentive compensation program Excellent progress since GBP introduction ROIC* 23.9% Expect additional improvement in % * Adjusted. 21

22 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 Strategies 22

23 Dividends Top-tier dividend in CPG industry Announced 5.4 percent increase for 2017 dividend 83 rd consecutive year K-C has paid a dividend, 45 th consecutive annual increase Paid $13.5+ billion in cash dividends over past 13 years PER SHARE DIVIDEND (Declared) DIVIDEND PAYOUT (Based on adjusted EPS) $ % 41% $

24 Share Repurchases Cumulative share repurchases of $15.4 billion Strong track record of reducing share count 502 SHARES OUTSTANDING (Millions) Targeting $800 million to $1 billion in 2017 (29%) 357 Year-end 2003 Year-end

25 Total Shareholder Returns Since Launch of GBP (July 2003) 266% 268% 203% KMB S&P 500 S&P Consumer Staples Index 25

26 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 2016 Annual Report on Form 10-K, SEC filings or news releases, call (800)

27 Safe Harbor Statement Forward-Looking Information Certain matters in this presentation, including our 2017 outlook, expectations and planning assumptions, and any estimates, projections, and statements relating to our business plans 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, the anticipated cost savings from the company s FORCE program and contingencies. There can be no assurance that these future events will occur as anticipated or that the company s results will be as estimated. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. For a more complete listing and description of other 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, 2016 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. 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 ( This presentation also includes information on organic net sales, which describes the impact of changes in volume, net selling prices and product mix on net sales. Changes in foreign currency exchange rates also impact the year-over-year change in net sales. 27