Announces Strong Long-Term Growth & Return
Algorithm with Organic Net Sales Growth Ahead of Market Growth and
Adjusted EPS Growth in Mid-to-High Single Digits
Targets More Than $3
Billion in Gross Productivity Savings and Approximately
$500 Million in Working Capital
Savings
Commits to 100% Natural Forest Free Ambition
Across Product Portfolio
DALLAS, March 27,
2024 /PRNewswire/ -- Kimberly-Clark Corporation
(NYSE: KMB) announced that today, Mike
Hsu, Chairman and Chief Executive Officer, and members of
his executive leadership team are unveiling the next phase of the
company's transformation, including a new operating model and key
commercial initiatives designed to grow its brands and businesses
at a faster pace than its categories.
"Over the past five years, our global team's dedication and
strong execution have positioned us to fully leverage the scale
we've built and to catapult Kimberly-Clark into its next chapter of
growth," said Hsu. "We are building on the consumer centricity and
commercial advantages we've established by moving to a more agile
and focused operating structure that we are confident will help
accelerate our proprietary pipeline of innovation in right-to-win
spaces and improve our growth trajectory, profitability, and
returns on investment. We have more than 150 years of history,
transforming groundbreaking insights into innovative categories,
with products that provide Better Care for a Better World. We are
excited to build on the strength of that legacy as we drive for
consistent, long-term value creation."
Hsu added, "Science and innovation are competitive advantages at
Kimberly-Clark, and together they fuel our ability to meet the
needs of today's consumers. Sustainability is a critical component
of the Kimberly-Clark innovation strategy, and we are proud to
announce our ambition to be 100% Natural Forest Free in all our
products and to be more than mid-way to this goal by 2030."
The Kimberly-Clark Operating Model
The company will focus on driving a step-change in performance
by sharpening its strategic focus through a new operating model
that leverages three synergistic forces:
- Accelerating Pioneering Innovation to capture
significant growth available in its categories by investing in
science and technology to satisfy unmet and evolving consumer
needs. Kimberly-Clark will focus on growing 12 powerhouse brands
that have #1 or strong #2 positions and drive more than 80% of the
company's net sales in five, global daily-need spaces with a total
addressable market of approximately $240
billion: Baby & Child Care, Feminine Care, Adult Care,
Family Care, and Professional.
- Optimizing its Margin Structure to deliver superior
consumer propositions at every rung of the price-value ladder. The
company will implement initiatives and deploy technology and data
analytics designed to create a fast, adaptable, integrated supply
chain with greater visibility that can deliver continuous
improvement. The planned supply chain modernization is expected to
generate more than $3 billion in
gross productivity and $500 million
in working capital savings that will be used to help fuel growth
investments.
- Wiring its Organization for Growth to drive agility,
speed, and focused execution that extends the company's competitive
advantages further into the future. In the coming months, the
company plans to reorganize its operations into three business
segments:
-
- North America: A
business that currently generates approximately $11 billion in sales annually and a 23% operating
profit margin that will leverage its significant scale to amplify
value creation, drive an end-to-end cost transformation, and
accelerate innovation into fast-moving consumer need spaces through
11 powerhouse brands across consumer and professional
channels.
- International Personal Care (IPC): A segment with
approximately $6 billion in sales
annually and low-to-mid teens operating profit margins that is
focused on three core categories ꟷ Baby & Child Care, Feminine
Care and Adult Care. IPC is designed to drive strong growth and
improved profitability by scaling a proven growth model, with
focused investments in five Core Markets that make up approximately
60% of segment sales. In the 50 Enterprise Markets that make up the
balance of the business, the company will seek to improve growth
trajectories, profitability and returns on investment by optimizing
routes-to-market while harmonizing and simplifying product
portfolios.
- International Family Care and Professional (IFP): A
business that currently generates approximately $3.5 billion in sales annually and approximately
10% operating margins. IFP will bring together the company's
international consumer tissue business with its international
professional business to capture synergies and establish shared
resources globally. The segment will focus on improving its
business mix and profitability by growing six iconic brands in five
large Family Care and five Professional markets while capturing
significant margin potential by leveraging shared technology
platforms, and efficiently deploying and scaling the best of its
business.
These three new business segments will be supported by more
efficient, world-class functions, including Research &
Development, Marketing, Finance, Information Technology, and Human
Resources. The company expects to complete its transition to the
new organizational structure by the end of 2024. These actions are
expected to generate approximately $200
million of selling, general and administrative savings in
the next few years that will be available to invest back in the
business.
100% Natural Forest-Free Ambition
Sustainability is a key pillar of Kimberly-Clark's innovation
pipeline, with the company focused on delivering products with
enhanced consumer benefits while striving to use less material and
increasing the use of more sustainable material. Over the past
decade, the company has explored an extensive array of alternative
fiber options, investing significantly in developing more
sustainable products. Based on progress against existing goals,
Kimberly-Clark is setting a new ambition to be 100% Natural Forest
Free across its product portfolio. The company expects to be more
than halfway to this goal by 2030.
Long-Term Growth and Return Algorithm
Kimberly-Clark has set long-term growth and return targets that
include:
- Organic Net Sales growth ahead of market growth;
- Adjusted Operating Profit growth in the mid-to-high single
digits on a constant currency basis;
- Adjusted EPS growth in mid-to-high single digits on a constant
currency basis; and
- Annual Free Cash Flow generation of at least $2 billion.
"We see a clear path to consistent growth and strong margin
expansion as we sharpen our focus on areas of competitive advantage
and where we believe we have the right to win," said Nelson Urdaneta, Chief Financial Officer.
"Leveraging our strong innovation pipeline and go-to-market
capabilities to drive growth, our new productivity programs to
deliver efficiencies, and our capital priorities to support
reinvestment and accelerate our strategic plan will support our
ability to achieve our new long-term financial profile in the years
ahead."
The company's capital priorities have not changed. These
priorities include investing to accelerate organic growth with
strong returns that will strengthen the company's market positions;
growing the dividend while maintaining the company's single-A
credit rating; evaluating strategic acquisitions that can deliver
incremental growth and return opportunities; and allocating
residual capital to share repurchases, to minimally offset dilution
from equity incentive programs.
The company currently expects to incur approximately
$1.5 billion in one-time
restructuring and reorganization costs, split roughly into 50% in
non-cash charges and 50% of cash expenses, over the next three
years as it implements its plans.
2024 Outlook
The company noted that the outlook it provided in January is
consistent with its new long-term growth and return targets. The
company continues to expect to deliver a low-to-mid single-digit
percentage increase in 2024 Organic Net Sales versus the prior year
period, with growth in reported Net Sales forecast to reflect
negative impacts of approximately 300 basis points from currency
translation and 60 basis points from the Brazil Tissue divestiture.
Adjusted Operating Profit is still expected to grow at a high
single-digit to low double-digit rate on a constant-currency basis
and Adjusted Earnings Per share are expected to grow at a high
single-digit rate on a constant-currency basis versus the prior
year period. Reported growth in Operating Profit and Earnings Per
Share are still expected to be negatively impacted by approximately
400 basis points from currency translation.
This outlook reflects assumptions subject to change given the
macro environment.
2024 Investor Day Presentation
The company is hosting its Investor Day in New York City today beginning at 9 a.m. Eastern Daylight Time. The event will also
be webcast and accessible from the Events & Presentations
section of www.kimberly-clark.com. A replay of the webcast and
slides shown during the presentations will be available following
the event through the same website.
About Kimberly-Clark
Kimberly-Clark (NYSE: KMB) and its trusted brands are an
indispensable part of life for people in more than 175 countries.
Fueled by ingenuity, creativity, and an understanding of people's
most essential needs, we create products that help individuals
experience more of what's important to them. Our portfolio of
brands, including Huggies, Kleenex, Scott, Kotex, Cottonelle,
Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Plenitud,
Sweety, Softex, Viva and WypAll, hold No. 1 or No. 2 share
positions in approximately 70 countries. We use sustainable
practices that support a healthy planet, build strong communities,
and ensure our business thrives for decades to come. We are proud
to be recognized as one of the World's Most Ethical Companies® by
Ethisphere for the fifth year in a row. To keep up with the latest
news and to learn more about the company's 150-year history of
innovation, visit kimberly-clark.com.
Forward Looking Statements
Certain matters contained in this news release concerning the
outlook, anticipated financial and operating results, raw material,
energy and other input costs, anticipated currency rates and
exchange risks, including in Argentina and Türkiye, sources and uses of
cash, charges and savings from the 2024 Global Transformation
Initiative, growth initiatives, sustainability initiatives, product
innovations, contingencies and anticipated transactions of the
company constitute forward-looking statements and are based upon
management's expectations and beliefs concerning future events
impacting the company. In addition, many factors outside our
control, including the risk that we are not able to realize the
anticipated benefits of the Global Transformation Initiative, risks
related to any delays in the timing for implementing the Global
Transformation Initiative or potential disruptions to our business
or operations as we execute on the Global Transformation
Initiative, the war in Ukraine
(including the related responses of consumers, customers and
suppliers as well as sanctions issued by the U.S., the European
Union, Russia or other countries),
pandemics, epidemics, fluctuations in foreign currency exchange
rates, prices and availability of our raw materials, supply chain
disruptions, disruptions in the capital and credit markets,
counterparty defaults (including customers, suppliers and financial
institutions with which we do business), failure to realize the
expected benefits or synergies from our acquisition and disposition
activity, impairment of goodwill and intangible assets and our
projections of operating results and other factors that may affect
our impairment testing, changes in customer preferences, severe
weather conditions, regional instabilities and hostilities
(including the war in Israel),
government trade or similar regulatory actions, potential
competitive pressures on selling prices for our products, energy
costs, our ability to maintain key customer relationships, as well
as general economic and political conditions globally and in the
markets in which we do business, could affect the realization of
these estimates.
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
description of certain factors that could cause the company's
future results to differ from those expressed in any such
forward-looking statements, see Item 1A entitled "Risk Factors" in
the company's Annual Report on Form 10-K for the year ended
December 31, 2023.
Non-GAAP Financial Measures
This news release refers to the following financial measures
that have not been calculated in accordance with accounting
principles generally accepted in the U.S., or GAAP, and are
therefore referred to as non-GAAP financial measures:
- Adjusted Operating Profit
- Adjusted EPS
- Free Cash Flow
Adjusted Operating Profit and Adjusted EPS consist of Operating
Profit and Diluted Net Income Per Share, respectively, that in each
case is adjusted for certain nonrecurring, infrequent, unusual or
other items. Free Cash Flow consists of Cash Provided by
Operations, less Capital Spending.
Each non-GAAP financial measure referenced in this news release
is presented on a forward-looking basis. Kimberly-Clark does not
provide a reconciliation of these forward-looking non-GAAP
financial measures to the most directly comparable GAAP financial
measures on a forward-looking basis because it is unable to predict
certain adjustment items without unreasonable effort. Please note
that these items could be material to Kimberly-Clark's results
calculated in accordance with GAAP.
This news release also includes forward-looking information
regarding organic sales growth, which describes the impact of
changes in volume, net selling prices and product mix on net sales.
Changes in foreign currency exchange rates, acquisitions and exited
businesses also impact the year-over-year change in net sales.
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SOURCE Kimberly-Clark Corporation