Kimberly Clark 4Q15 Earnings Call Notes

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Kimberly-Clark’s (KMB) CEO Tom Falk on Q4 2015 Results

Remain very optimistic about growth prospects in 2016

“Even though volatility has increased and economies are slowing in some parts of the world we remain very optimistic about our growth prospects. For 2016 we are targeting organic sales growth of at least high single digits for our business in the developing and emerging markets.”

Facing continued currency headwinds in foreign markets

“Like other multinational companies, we’re facing continued currency headwinds. We’re planning that currency translation will reduce sales and earnings by 5% to 6% this year. The all-in drag on earnings including currency transaction is expected to approach 15%. These projections are based on forward exchange rates as of a couple of weeks ago which are pretty consistent with recent spot rates in most cases. To reduce the impact of currency headwinds we plan to raise selling prices in some of our international markets.”

Lots of competition around but I wouldn’t say it’s getting worse

“In China, we saw a bit more competitive pricing being spent in the market by some of the competitors which we matched up to at some extent, but we saw some of that in the third quarter as you may recall, but had a very strong volume quarter again and again have lots of innovation coming. So still tons of competition around, but I wouldn’t say it is getting worse, but it is continuing.”

China probably a bit of a slowdown, but still growing overall

“In other markets China kind of a mixed bag with a little weaker quarter for us and yes some of that was execution on our front that we need to improve and there is plenty of competition there, probably a bit of the economic slowdown, but again that market is still growing overall, it’s just not at the same pace that it once was.”

Birth rates are ticking up

“If you look at a market like China, we’d still say high single digit growth. It is going to be the year of the monkey in China which is a good year and so you typically have a little bit of an uptick in the birth rate, restarts with the forecasters were calling for, the birth rate in the U.S. is actually ticking up. ”

Local competitors have exposure to dollar priced commodities

“If you look at a market like China, we’d still say high single digit growth. It is going to be the year of the monkey in China which is a good year and so you typically have a little bit of an uptick in the birth rate, restarts with the forecasters were calling for, the birth rate in the U.S. is actually ticking up. ”

We’re pretty bullish on China

“We’re doing a ton in e-commerce and that channel is growing pretty dramatically in China and so it’s probably a third of our diaper sales were in e-commerce which is over wait the rest of the categories. We’re still seeing good mid-tier super premium segment growth where we tend to do better. So again, I’d say China we are pretty bullish, lots of competition but good growth in innovation coming and some geography expansion as well.”