Investor Presentation

Transcription

1 Leading the world in essentials for a better life. Investor Presentation Financial Information as of December 31, 2012

2 Highlights $21+ 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 billiondollar 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 Robert Abernathy Group President of Europe, Global Nonwovens, Continuous Improvement and Sustainability Joanne Bauer President of Kimberly-Clark Health Care Christian Brickman President of Kimberly-Clark International Mark Buthman Senior Vice President and Chief Financial Officer Lizanne Gottung Senior Vice President and Chief Human Resources Officer Michael Hsu Group President of North America Consumer Products Nancy Loewe Senior Vice President and Chief Strategy Officer Thomas Mielke Senior Vice President, General Counsel and Chief Compliance Officer Anthony Palmer President of Global Brands and Innovation Elane Stock President of Kimberly-Clark Professional 5

6 Four Global Segments Personal Care Diapers Training/Youth/Swim Pants Infant and Child Wipes Feminine Care Incontinence Care Consumer Tissue Facial Tissue Bathroom Tissue Paper Towels K-C Professional (KCP) Facial Tissue, Bathroom Tissue and Paper Towels for away-from-home use Wipers Safety Products Health Care Surgical and Infection Prevention Products Medical Devices 2012 Net Sales 8% 16% 45% 31% 2012 Operating Profit* 7% 16% 50% 27% 2012 Operating Margin* 17.3% 16.6% 13.6% 14.1% * Excludes corporate and other and other (income) and expense, net. 6

7 Geographic Breakdown 2012 Net Sales 15% 49% 36% 2012 Operating Profit* 7% 31% 62% North America Asia, Latin America and other Europe 2012 Operating Margin* 19.0% 13.3% 7.0% * Excludes corporate and other 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, margin, 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 Improvement Objective CAGR Net Sales 3 to 5 percent 5 percent EPS* ROIC* Mid- to highsingle digits 20 to 40 basis points 5 percent 30 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 INTERNATIONAL KCP & HEALTH CARE Drive rapid growth throughout K-C International (KCI) Focus on China, Russia and Latin America Grow in higher margin segments in KCP and Health Care 10

11 Win Globally in Personal Care Leverage strong brands Win with consumers by providing superior innovation supported by integrated marketing campaigns Drive trade-up with higher margin solutions Solid performance in 2012 Net sales: +5 percent Operating profit: +9 percent Personal Care Net Sales % of Total Company 39% 45%

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 10.2% Operating Margin 11.4% 13.6%

13 Pulp and Tissue Restructuring Actions Exited remaining integrated pulp operations; streamlined tissue manufacturing asset base Charges completed at the end of 2012 Cumulative costs $375 million after tax ( ) Operating profit benefit at least $100 million in 2014 Realized $60 million through 2012 Annualized Operating Margin Benefit of Restructuring > bps >50 50bps Consumer Tissue KCP 13

14 Drive Rapid Growth Throughout KCI CAGR 11% 11% Net Sales 22% 16% Operating Profit KCI % of Total Company 37% 32% Double-digit growth since GBP introduction Now approaching 40 percent of company sales Strong market positions Attractive market dynamics Multi-tier product strategies Targeted geographic expansion and growth plans Net Sales Operating Profit* * Total company amounts are adjusted. 14

15 Focus Areas: China, Russia, Latin America Over 50 percent of KCI Innovation across all categories Selling and marketing investments China business expanding into more cities and product tiers 4-Year Organic Net Sales CAGR (through 2012) 9% 13% Expansion opportunities in Russia and Latin America also Emphasis on Personal Care and KCP KCI China, Russia, Latin America 15

16 Personal Care in KCI Double-digit sales CAGR since GBP launch Personal Care in KCI larger than 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 2012 organic sales growth 13 percent Net Sales Geographic Mix Personal Care % 13% 49% North America Europe 7% 57% 44% KCI 16

17 Grow in Higher Margin Segments in KCP and Health Care K-C Professional Provide essentials for a healthy, safe and productive workplace Invest in high-growth Safety & Wiping segments Sustainability leadership Expand in Latin America, Russia and China Leverage global go-to-market capabilities Health Care Accelerate growth in Medical Devices by investing in sales, innovation and brand building Organic growth fueled by new products and increased sales capacity Innovations to improve patient outcomes and reduce healthcare-acquired infections 17

18 Investing For Growth Strategic Marketing Supporting innovation Building brand equity Increasing use of non-traditional channels and programs Improving efficiencies STRATEGIC MARKETING SINCE 2003 Increased spending more than $450 million 2012 up $115 million versus prior year Expect additional increases in

19 European Strategic Changes Announced October 2012 Exiting diaper category in most of Western and Central Europe; divesting or exiting some other lower margin or slower growing businesses Streamlining manufacturing footprint and administrative organization to align with the strategic changes Restructuring costs through 2014 of $300 to $350 million after tax* Affected businesses generate annual net sales of approximately $500 million and negligible operating profit Benefits from the changes: Better focus on strongest positions and growth opportunities Improves underlying profitability Enables more sustainable returns going forward * Estimated restructuring costs range updated as part of our first quarter earnings release on 4/19/13. 19

20 Sustainable Cost Reduction FORCE Savings ($ Million) $200 $295 Ongoing program Delivered $1.9 billion over past 9 years Supply chain focus Global procurement organization Lean manufacturing practices 2013 plan: $250 to $300 million Average

21 Working Capital Improvement 73 Cash Conversion Cycle (Days) Strong improvement since 2008 Improved accounts payable Inventory focus Expect continued progress going forward Building further capabilities Targeting 1 day improvement in

22 Return on Invested Capital 13.7% ROIC* 16.0% Excellent progress since GBP introduction Key component of long-term incentive compensation program Expect additional improvement in * Adjusted. 22

23 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 Consider M&A Not core part of growth strategy Return excess cash to shareholders via share repurchases 23

24 Dividends Per Share Dividend (Declared) $2.96 Dividend Payout* 56% 41% $ Top-tier dividend in Consumer Packaged Goods industry Announced 9.5 percent dividend increase for 2013 on February 21 st Represents 79 th consecutive year K-C has paid a dividend and the 41 st consecutive annual increase $3.24 per share Paid more than $9 billion in cash dividends over past 10 years * Declared dividends per share divided by adjusted basic earnings per share from continuing operations. 24

25 Share Repurchases Share Repurchases ($ Billion) Shares Outstanding (Millions) $2.8 $10.6 billion in total 502 $1.6 $1.5 $1.2 $1.3 $0.8 $0.6 $0.8 $ Dec % 389 Dec Excess cash flow for share repurchases Strong track record of reducing share count 2013 plan: $1.0 to $1.2 billion 25

26 Total Shareholder Returns* 151% KMB S&P 500 S&P 500 Consumer Staples 97% 127% 48% 48% 44% 36% 39% 19% 16% 11% 9% 1 Year 3 Year 5 Year 10 Year * Total Shareholder Returns through 12/31/12 assumes reinvestment of dividends. 26

27 To Learn More About Kimberly-Clark Contact Investor Relations with your questions Paul Alexander, Vice President at Visit to view our interactive annual report, SEC filings or news releases To obtain copies of our 2012 Annual Report on Form 10-K, SEC filings or news releases, call

28 Safe Harbor Statement Forward-Looking Information Certain matters in this presentation constitute forward-looking statements and are based upon management s expectations and beliefs concerning future events impacting the company. 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, forward-looking statements contained in this presentation are based on our fourth quarter 2012 earnings communication which occurred on January 25 th, 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, 2012 entitled Risk Factors. Non-GAAP Financial Measures This presentation contains some financial measures that have been adjusted to exclude certain items and differs 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 ( 28