Kimberly-Clark FY Conference Summary Company Overview - **Company**: Kimberly-Clark (NYSE: KMB) - **Industry**: Consumer Packaged Goods (CPG) - **Conference Date**: September 10, 2025 Key Points Transformation and Portfolio Reshaping - Kimberly-Clark has evolved from an industrial company to a consumer-focused CPG company over the last few decades, with a significant shift occurring since the late 1980s and early 1990s [2][3] - The company has focused on premium, value-added offerings and brand building, enhancing consumer-centric capabilities [1][4] - The CEO highlighted the importance of consumer insights and marketing execution in driving growth [4][5] Financial Performance and Growth - Since the CEO's tenure began, Kimberly-Clark has achieved a compounded organic growth rate of approximately 4% [5] - The company has historically faced challenges with lower gross margins and higher EPS volatility compared to peers, primarily due to pulp cost exposure [5][6] - A joint venture with Suzano, a major eucalyptus pulp producer, aims to reduce volatility and improve visibility into the tissue business [6][8] 2030 Financial Targets - Kimberly-Clark aims for a 40% gross margin and 18% EBITDA by 2030, with expectations to reach these milestones ahead of schedule due to portfolio changes [9][10] - The company has initiated a $3 billion productivity program over five years, tracking ahead of schedule [10][11] Advertising and Brand Building - The company has significantly increased advertising investments, from $500 million to $600 million, focusing on digital channels for better targeting [18][19] - Kimberly-Clark has received recognition for its advertising efforts, winning 11 Lion Awards at Cannes, more than doubling its previous five-year total [19][20] Innovation and Product Development - The company emphasizes product superiority and engineering capabilities as foundational principles [22][23] - An innovative absorbent core technology for diapers has been successfully rolled out in multiple markets, contributing to market share growth [23][24] - R&D investments are healthy, at approximately 1.9% of net sales, with CapEx increasing from 3.6% to 4.3% of net sales [26][27] Market Dynamics and Challenges - The diaper category has seen subdued growth due to increased promotional activity and competition from private labels, with recent growth at around 1% [29] - The company is strategically avoiding participation in aggressive promotional activities to maintain brand integrity [29] Future Outlook - Kimberly-Clark is positioned as a more capable company than a decade ago, with reduced earnings volatility and a strong innovation pipeline [32][33] - The company is focused on becoming world-class in productivity, with a target of achieving around 6% productivity growth this year [33] Conclusion - Kimberly-Clark is optimistic about its future, emphasizing a lean, agile operating model and a commitment to winning in local markets [34]

Financial Data and Key Metrics Changes - The company reported a 4% compound annual growth rate (CAGR) in net sales since 2021, with consistent volume and mix growth observed over the last couple of years [10] - Operating margin improved by 300 basis points over the past two years, while marketing spending increased by 33% [10] Business Line Data and Key Metrics Changes - The North American diaper business saw a significant shift towards premium products, with the premium segment increasing from 40% to over 70% [13] - E-commerce now accounts for more than 25% of consumer sales, with a strong performance in digital channels [9] Market Data and Key Metrics Changes - The global category growth rate in the second quarter was around 2%, with expectations to outpace this through innovation and premiumization [16] - The company is gaining or holding market share in seven of its eight consumer categories, particularly in personal care [10] Company Strategy and Development Direction - The company is transforming into a pure-play personal care and wellness company, focusing on higher growth and higher margin categories [5][42] - A new leadership appointment was made to accelerate transformation, with a focus on leveraging global expertise and proprietary technologies [6][11] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are under pressure, but the company is well-positioned to meet their needs through innovation and product performance [16] - The company expects to continue investing in innovation and marketing to drive growth, despite current economic challenges [16][39] Other Important Information - The company plans to increase capital expenditures to around 6% of net sales in the coming years to support supply chain transformation [28] - The advertising spend has doubled since 2018, with a current run rate of about 7% of sales, which management believes is appropriate for long-term growth [39] Q&A Session Summary Question: What is driving the positive volume mix growth? - Management indicated that consumers are willing to trade up for better-performing products, leading to significant premiumization in categories like diapers [13][15] Question: What are the key focus areas for the COO in the next year? - The COO emphasized the importance of performing while transforming, focusing on executing current strategies while laying the groundwork for future growth [40] Question: How does the company plan to manage productivity targets in light of recent changes? - The CFO confirmed that the company remains committed to its long-term productivity targets and is tracking ahead of its $3 billion gross productivity program [54]

Financial Data and Key Metrics Changes - The company reported a 4% compound annual growth rate (CAGR) in net sales since 2021, with consistent volume and mix growth observed over the last couple of years [10] - Operating margin improved by 300 basis points over the past two years while marketing spending increased by 33% [10] Business Line Data and Key Metrics Changes - The North American diaper business saw a significant shift towards premium products, with the premium segment increasing from 40% to over 70% [13] - E-commerce now accounts for more than 25% of consumer sales, with a strong share index compared to national averages [9] Market Data and Key Metrics Changes - The global category growth rate in the second quarter was around 2%, with expectations to outpace this through innovation and premiumization [16][18] - In China, the premium segment of the diaper market grew from 6% in 2019 to 42% [13] Company Strategy and Development Direction - The company is transforming into a pure-play personal care and wellness company, focusing on high-growth, high-margin categories [5][42] - A new leadership appointment aims to enhance the company's operational capabilities and drive growth [11] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are under pressure, but the company is well-positioned to meet their needs across all price tiers [16] - The company expects to continue investing in innovation and marketing to drive growth, despite a challenging consumer environment [16][39] Other Important Information - The company plans to increase capital expenditures to around 6% of net sales in the coming years to support supply chain transformation [28] - The joint venture with Suzano is expected to reduce earnings volatility related to fiber costs significantly [43] Q&A Session Summary Question: What is driving the positive volume mix growth? - Management highlighted that consumers are willing to trade up for better-performing products, leading to a significant shift towards premium offerings [12][13] Question: What are the key drivers of the current 2% category growth? - The focus on driving new benefits, innovation, and premiumization across all price tiers is essential for growth [18] Question: How is the company approaching innovation? - The company plans to accelerate the pace of innovation, focusing on both incremental and category-changing advancements [20] Question: What are the priorities for the new COO? - The COO emphasized the importance of performing while transforming, ensuring the company executes effectively while laying the groundwork for future growth [40] Question: How does the company view its advertising investment? - The company has doubled its advertising spend since 2018 and is focused on creating brand love through effective storytelling [39] Question: What is the outlook for earnings growth into 2026 and 2027? - The company expects ongoing operations to grow in line with its long-term algorithm, with specific adjustments for the joint venture's impact [56]

Financial Data and Key Metrics Changes - The company reported a 4% compound annual growth rate (CAGR) in net sales since 2021, with consistent volume and mix growth observed over the last couple of years [10] - Operating margin improved by 300 basis points over the past two years while marketing spending increased by 33% [10] Business Line Data and Key Metrics Changes - The North American diaper business saw a significant shift towards premium products, with the premium segment increasing from 40% to over 70% [13] - E-commerce now accounts for more than 25% of consumer sales, with a strong share index compared to national averages [9] Market Data and Key Metrics Changes - The company experienced a 2% weighted average category growth rate globally in the second quarter [16] - In developed markets, there is a notable shift towards premiumization, with significant growth in premium segments in various regions, including China [13] Company Strategy and Development Direction - The company is transforming into a pure-play personal care and wellness company, focusing on high-growth, high-margin categories [5] - A multi-year pipeline of proprietary innovation is being developed to expand categories and meet consumer needs [5] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are under pressure, and there is no immediate catalyst for change in the near term [16] - The strategy of cascading innovation across all tiers is driving growth, with a focus on meeting consumer needs at every price point [15] Other Important Information - The company plans to increase capital expenditures to around 6% of net sales in the coming years to support supply chain transformation [28] - The advertising spend has doubled since 2018, with a projected ongoing run rate of about 7% of sales [39] Q&A Session Summary Question: What is driving the positive volume mix growth? - Management highlighted that consumers are willing to trade up for better-performing products, leading to significant shifts towards premium offerings [12][13] Question: What are the drivers of the current 2% category growth? - The focus on driving new benefits, innovation, and premiumization across all price tiers is essential for growth [18] Question: How is the company approaching innovation? - The company is committed to both an accelerated pace of innovation and significant improvements in product performance [20][21] Question: What are the top priorities for the new COO? - The focus is on performing while transforming, ensuring the organization is set up for future success while executing current strategies [40] Question: How does the company view its portfolio changes? - The company aims to focus on higher growth, higher margin categories and reduce earnings volatility associated with fiber costs [42][43] Question: What is the outlook for advertising investment? - The company has increased advertising investment significantly and plans to continue this trend to enhance brand storytelling and consumer connection [30][39]

Marketing & Consumer Behavior - The marketing industry aims to create "brand love" among consumers [1] - Research identifies four possible consumer reactions beyond brand love, indicating a spectrum of responses [1]