2013 kmb investor presentation vfinal - kimberly-clark€¦ · investor presentation financial...

Leading the world in essentials for a better life.


Investor PresentationFinancial Information as of December 31, 2012


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 billion-

dollar brands:

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Our Values


Authentic: Our heritage is one of honesty, integrity and doing the right thingAccountable: We take ownership for our business and our futureInnovative: Our commitment is to new ideas that add valueCaring: We respect eachother and care for the communities where we live and work

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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 www.kimberly-clark.com/sustainability for

information on our sustainability strategy and performance

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Robert AbernathyGroup President of Europe, Global Nonwovens, Continuous Improvement and Sustainability

Joanne BauerPresident of Kimberly-Clark Health Care

Senior Leadership Team

Mark ButhmanSenior Vice President and Chief Financial Officer

Christian BrickmanPresident of Kimberly-Clark International

Anthony PalmerPresident of Global Brands and Innovation

Lizanne GottungSenior Vice President and Chief Human Resources Officer

Thomas MielkeSenior Vice President, General Counsel and Chief Compliance Officer

Thomas FalkChairman and CEO

Elane StockPresident of Kimberly-Clark Professional

Michael HsuGroup President of North America Consumer Products

Nancy LoeweSenior Vice President and Chief Strategy Officer

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Four Global Segments

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Personal Care Consumer Tissue

K-C Professional (KCP) Health Care

• Diapers• Training/Youth/Swim Pants• Infant and Child Wipes

• Facial Tissue• Bathroom Tissue• Paper Towels

• Facial Tissue, Bathroom Tissue and Paper Towels for away-from-home use

• Wipers• Safety Products

• Surgical and Infection Prevention Products• Medical Devices

45%

31%

16%

8%

2012 Net Sales

50%27%

16%

7%

2012 Operating Profit*

* Excludes corporate and other and other (income) and expense, net.

17.3%

13.6%16.6%

14.1%

2012 Operating Margin*

• Feminine Care• Incontinence Care


Geographic Breakdown

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49%

36%

15%

2012 Net Sales

62%

31%

7%

2012 Operating Profit*

* Excludes corporate and other and other (income) and expense, net.

19.0%

13.3%

7.0%

2012 Operating Margin*

North AmericaAsia, Latin America and otherEurope

Leading the world in essentials for a better life. 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


Improvement Objective

2004 – 2012CAGR

Net Sales 3 to 5 percent 5 percent

EPS* Mid- to high-single digits 5 percent

ROIC* 20 to 40 basis points 30 basis points

Dividend In line with EPS 9 percent

GBP Objectives and Results

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* EPS and ROIC are adjusted.


Business Unit Strategies

Deliver targeted growth and improve margins in Consumer Tissue

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PERSONALCARE

CONSUMER TISSUE

Win globally in Personal Care

K-CINTERNATIONAL

Drive rapid growth throughout K-C International (KCI)• Focus on China, Russia and Latin America

KCP & HEALTH CARE

Grow in higher margin segments in KCP and Health 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

Win Globally in Personal Care

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39%45%

2003 2012

Personal Care Net Sales% of Total Company


Deliver Targeted Growth and Improve Margins in Consumer Tissue

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• Launch value-added innovations• Focus on net realized revenue, mix, cost reduction• Excellent progress with margin improvement

10.2%11.4%

13.6%

2010 2011 2012

Operating Margin


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

(2011-2012)

• Operating profit benefit at least $100 million in 2014– Realized $60 million through 2012

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175

50

Consumer Tissue KCP

>50 bps

>175 bps

Annualized Operating Margin Benefit of

Restructuring


11% 11%

Net Sales Operating Profit

22%

37%

16%

32%

2003 2012Net Sales Operating Profit*

Drive Rapid Growth Throughout KCI

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• 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

* Total company amounts are adjusted.

2004 - 2012 CAGR

KCI % of Total Company


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– Expansion opportunities in Russia and Latin

America also

• Emphasis on Personal Care and KCP

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9%

13%

KCI China, Russia, Latin America

4-Year Organic Net Sales CAGR

(through 2012)


57%13%

30%

44%

7%

49%

Personal Care in KCI

• Double-digit sales CAGR since GBP launch

• Personal Care in KCI larger thanNorth 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

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2003

2012

Net SalesGeographic MixPersonal Care

North AmericaEurope

KCI


Grow in Higher Margin Segments in KCP and Health Care

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• 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

• 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

K-C Professional Health Care


Investing For Growth – Strategic Marketing

• Supporting innovation• Building brand equity• Increasing use of non-traditional

channels and programs• Improving efficiencies

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STRATEGIC MARKETING SINCE 2003• Increased spending more than $450 million• 2012 up $115 million versus prior year• Expect additional increases in 2013


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

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* Estimated restructuring costs range updated as part of our first quarter earnings release on 4/19/13.


$200

$295

2004-2011Average

2012

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Sustainable Cost Reduction

• 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

FORCE Savings($ Million)


Cash Conversion Cycle (Days)

Working Capital Improvement

• Strong improvement since 2008– Improved accounts payable– Inventory focus

• Expect continued progress going forward– Building further capabilities

– Targeting 1 day improvement in 2013

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73

58

50 47 45

2008 2009 2010 2011 2012


Return on Invested Capital

• Excellent progress since GBP introduction

• Key component of long-term incentive compensation program

• Expect additional improvement in 2013

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13.7%

16.0%

2003 2012

ROIC*

* Adjusted.


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

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Dividends

• Top-tier dividend in Consumer Packaged Goods industry• Announced 9.5 percent dividend increase for 2013 on February 21st

– Represents 79th consecutive year K-C has paid a dividend and the 41st consecutive annual increase

– $3.24 per share• Paid more than $9 billion in cash dividends over past 10 years

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* Declared dividends per share divided by adjusted basic earnings per share from continuing operations.

$1.36

$2.96

2003 2012

41%

56%

2003 2012

Per Share Dividend(Declared) Dividend Payout*


Share Repurchases

• Excess cash flow for share repurchases• Strong track record of reducing share count• 2013 plan: $1.0 to $1.2 billion

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$1.6 $1.5

$0.8

$2.8

$0.6

$0

$0.8$1.2 $1.3

2004 2005 2006 2007 2008 2009 2010 2011 2012

$10.6 billion in total

$10.6 billion in total

Share Repurchases($ Billion)

Shares Outstanding(Millions)

502

389

-23%

Dec 312012

Dec 312003


Total Shareholder Returns*

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* Total Shareholder Returns through 12/31/12 – assumes reinvestment of dividends.

19%

48% 48%

151%

16%

36%

9%

97%

11%

44% 39%

127%

1 Year 3 Year 5 Year 10 Year

KMBS&P 500S&P 500 Consumer Staples


To Learn More About Kimberly-Clark

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• Contact Investor Relations with your questions– Paul Alexander, Vice President at 972.281.1440

• Visit www.kimberly-clark.com/investors 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 800.639.1352


Safe Harbor StatementForward-Looking InformationCertain 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 25th, 2013. 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 MeasuresThis 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 (www.kimberly-clark.com/investors).

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2013 kmb investor presentation vfinal - kimberly-clark€¦ · investor presentation financial...

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