Kimberly Clark 1Q16 Earnings Call Notes

Kimberly-Clark (KMB) Thomas J. Falk on Q1 2016 Results

Now expecting slightly less drag from currencies and prices than we had been

“our current assumptions have improved somewhat compared to three months ago. And while this helps our U.S. dollar results, it also means we’re expecting less benefits from selling price increases this year. As we said before, it’s important to look at currencies, commodities and selling prices together since they are all related. We’re now planning that the net impact of these three factors will be a mid to high single-digit drag on our bottom line growth this year, and that’s slightly better than what we shared with you in January. If this turns out to be the case, we’ll have added flexibility to invest more behind our top line growth initiatives.”

Everyone is expecting results to improve as the year progresses

“I would say the momentum throughout the first quarter, particularly in some of the key emerging markets, they had a stronger March than they started the year, and so that’s a positive sign. I was just with a lot of our international teams recently at our brand week, and I would say everybody is expecting their results to improve as the year progresses”

Saw private label share down in the US which is good

“In terms of the U.S., actually, we saw probably better growth in our business than the underlying category growth because we picked up share in a number of markets and consumers are still responsive to innovation. We saw private label shares flat to down in nearly every category that we’re in, which is again another sign of health of the consumer for us, and are probably maybe more bullish on the outlook in North America at this point in time than maybe we would have been even at the beginning of the year.”

Toughest competition in China has been from Japanese competitors

“Yeah. I would say in China in particular, the toughest competition of late has been our two Japanese-based competitors, Kao and Unicharm. Obviously, the weaker yen last year helped them support that in a way. At least it didn’t have as big of a negative impact on them relative to what was going on in the U.S. And so they’ve been more aggressive, Kao in particular. We’ve been gaining share, Kao has been gaining share, Unicharm has been losing share. And so there’s been more competition in that direction.”

China may be skipping a generation of retail development

“We are looking to see how e-commerce does scale. And it’s certainly in a market like China, where it may be skipping a generation of retail development, you don’t have as many retail channels developed in a lot of those markets, and you are seeing very dense population, very high smartphone penetration, and a much lower delivery cost to get that last mile delivery”