Investor Presentation

Transcription

1 Leading the world in essentials for a better life. Investor Presentation Financial Information as of December 31, 2013

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* President of Global Health Care Mark Buthman Senior Vice President and Chief Financial Officer Lizanne Gottung Senior Vice President and Chief Human Resources Officer Michael Hsu Group President of Kimberly-Clark North America Thomas Mielke Senior Vice President and General Counsel Anthony Palmer President of Global Brands and Innovation Elane Stock Group President of Kimberly-Clark International Kim Underhill President of Kimberly-Clark Professional *CEO of new health care company if potential spin-off of K-C Health Care occurs. 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 2013 Net Sales 8% 16% 45% 31% 2013 Operating Profit 7% 17% 48% 28% 2013 Operating Margin 17.8% 18.3% 14.9% 14.2% Operating profit and margin exclude corporate and other (income) and expense, net. 6

7 Geographic Breakdown 2013 Net Sales 14% 49% 37% 2013 Operating Profit 7% North America Asia, Latin America and other Europe 2013 Operating Margin 19.9% 32% 61% 13.9% 8.2% Operating profit and margin exclude corporate 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 4 percent EPS* ROIC* Mid- to highsingle digits 20 to 40 basis points 6 percent 40 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 K-C INTERNATIONAL Deliver targeted growth and improve margins in Consumer Tissue Drive rapid growth throughout K-C International (KCI) Focus on China, Russia and Latin America K-C PROFESSIONAL Grow in higher margin segments in KCP K-C HEALTH CARE Pursuing spin-off of business Announced 11/14/

11 Win Globally in Personal Care Leverage strong brands Win with consumers by providing superior innovation supported by integrated marketing campaigns Long track record of success 10-year organic net sales CAGR: +6 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 Operating Margin 10.2% 11.4% 13.6% 14.9%

13 Pulp and Tissue Restructuring Actions Exited remaining integrated pulp operations; streamlined tissue manufacturing asset base Charges completed at end of 2012 Cumulative costs $375 million after tax ( ) Operating profit benefit at least $100 million in 2014 Realized $70 million through 2013 Annualized Operating Margin Benefit of Restructuring >175 bps 175 >50 bps 50 Consumer Tissue KCP 13

14 Drive Rapid Growth Throughout KCI CAGR 10% Net Sales 22% 16% 11% Operating Profit KCI % of Total Company 39% 32% Double-digit growth since GBP introduction Nearly 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 operating profit amounts are adjusted. KCI = K-C s business in Asia, Latin America, the Middle East, Eastern Europe and Africa. 14

15 Focus Areas: China, Russia, Latin America Over 55 percent of KCI Innovation across all categories Selling and marketing investments China business expanding into more cities and product tiers 5-Year Organic Net Sales CAGR (through 2013) 8% 13% Expansion opportunities in Russia and Latin America also Increasing manufacturing asset base to support growth and improve profitability Emphasis on Personal Care and KCP KCI China, Russia, Latin America 15

16 Personal Care in KCI Double-digit sales CAGR since GBP launch Net Sales Geographic Mix Personal Care Personal Care in KCI larger than North America Leveraging strong brands, innovations and favorable market demographics % 13% 57% Driving market development, penetration and frequency of usage Making adult care and baby wipes businesses more global % 51% 5% North America KCI Europe 16

17 Grow in Higher Margin Segments in KCP Provide essentials for a healthy, safe and productive workplace Invest in high-growth, higher-margin Safety & Wiping segments Expand in Latin America, Russia and China Leverage global go-to-market capabilities and sustainability leadership Net Sales Growth ( CAGR Index) 1.0x 2.5x Washroom Wipers/Safety 17

18 Pursuing Potential Health Care Spin-Off Announced November 14, 2013 Would create publicly-traded company with $1.6 billion in annual net sales and leading market positions Rationale K-C Health Care strategic fit and growth priorities have changed over time Allow K-C Health Care to optimize performance and flexibility to pursue value-creation opportunities Further sharpen K-C s focus on growing consumer and KCP brands Expect to complete spin-off by end of Q3 2014, subject to Board approval and market, regulatory, other conditions 18

19 European Strategic Changes Announced October 2012 Exit diaper category in most of Western/Central Europe and some other lower margin or slower growing businesses Streamline cost structure to align with strategic changes Restructuring costs through 2014 $300 to $350 million range (after tax); cumulative costs through 2013 $308 million Benefits Improves underlying profitability Better focus on strongest positions and growth opportunities Status Diaper market exits complete Impacted facilities all closed or sold Workforce reductions essentially complete Overall results on track with operating plan 19

20 Investing For Growth Advertising Supporting innovation Building brand equity Increasing use of non-traditional channels and programs Improving efficiencies Significant increase in spending in last five years Advertising Spending ($ Million) $ % NSV $ % NSV

21 Sustainable Cost Reduction $ Avg. FORCE Savings ($ Million) $265 $295 $ Ongoing program Delivered $2.2 billion over past 10 years Accelerated performance in recent years Supply chain focus Global procurement organization Lean manufacturing practices Targeting at least $300 million in

22 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 to 2 day improvement in

23 Return on Invested Capital ROIC* 13.7% 17.5% Excellent progress since GBP introduction Key component of long-term incentive compensation program Expect additional improvement in * Adjusted. 23

24 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 24

25 Dividends Per Share Dividend (Declared) $3.24 Dividend Payout* 41% 56% $ Top-tier dividend in Consumer Packaged Goods industry Expect 2 to 4 percent increase for 2014 dividend 80 th consecutive year K-C has paid a dividend, 42 nd consecutive annual increase Smaller than average increase in advance of planned health care business spin-off Paid $10 billion in cash dividends over past 10 years * Declared dividends per share divided by adjusted basic earnings per share from continuing operations. 25

26 Share Repurchases Cumulative share repurchases of $11.8 billion Strong track record of reducing share count 502 Shares Outstanding (Millions) -24% Targeting $1.3 to $1.5 billion in Year-end 2003 Year-end

27 Total Shareholder Returns 155% 158% KMB S&P 500 S&P 500 Consumer Staples 141% 128% 109% 104% 85% 57% 59% 28% 32% 26% 1 Year 3 Year 5 Year 10 Year Total Shareholder Returns through 12/31/13 assumes reinvestment of dividends. 27

28 To Learn More About Kimberly-Clark Contact Investor Relations with your questions Paul Alexander, Vice President at Visit to view our annual report, SEC filings or news releases To obtain copies of our 2013 Annual Report on Form 10-K, SEC filings or news releases, call

29 Safe Harbor Statement Forward-Looking Information Certain matters in this presentation, including our 2014 outlook, expectations and plans, and any estimates, projections, and statements relating to our business plans, strategies or objectives, constitute forward-looking statements and are based upon management s expectations and beliefs concerning future events impacting the company. These statements are subject to risks and uncertainties, including currency rates and exchange risks, cost savings and reductions, raw material, energy, and other input costs, competition, and market demand and economic conditions. 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 2013 earnings communication which occurred on January 24, 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, 2013 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 Web site ( 29