Kimberly-Clark(US:KMB)2024-07-23 13:28Financial Data and Key Metrics Changes - The company reported a significant margin and EPS beat in Q2 2024, with solid volume mix-driven gains contributing to the performance [15][20] - The adjusted effective tax rate for the full year is projected to be between 23% and 24%, compared to 22.3% in the first half [20] Business Line Data and Key Metrics Changes - In North America, the first half was flat on a weighted basis, with improvements noted in six of eight categories during Q2 [7] - Huggies in China saw a market share increase of 180 basis points, while Andrex in the UK increased by 350 basis points [7] - In South Korea, Huggies has gained over 800 basis points since 2019, with a 300 basis point increase in the quarter [7] - Brazil's market share improved by about 100 basis points, indicating progress in brand proposition [7] Market Data and Key Metrics Changes - The company experienced solid volume mix growth in key markets such as the U.S., China, and the U.K. [36] - The second half of the year is expected to grow at a similar pace to Q2, driven by volume and mix, while pricing will play a lesser role [37] Company Strategy and Development Direction - The company is focused on a "wiring for growth" initiative, implementing proven strategies systematically across its focus markets [8][9] - There is a strong emphasis on building brands through advertising and innovation, while also recognizing the importance of promotions in certain categories [22] - The company is making organizational design changes to enhance operational efficiency and effectiveness [25][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering durable growth and sustainable shareholder returns, despite acknowledging ongoing challenges in the macro environment [5][16] - The company is closely monitoring consumer sensitivity, particularly in mid to lower-income households, but remains optimistic about its robust product offerings [65] - The divestiture of personal protective equipment is expected to impact profits by around 180 basis points in the second half of the year [69] Other Important Information - The company is on track to deliver $3 billion in savings over the next five years through supply chain transformation and overhead reductions [56][57] - The company is investing approximately 7% of sales in brand spending in the second half, up from 6% in the first half [19] Q&A Session Summary Question: When will market share growth translate into material growth outside the US and China? - Management indicated that they have a proven playbook for growth and are implementing it systematically, expecting to see improvements as local conditions evolve [8] Question: Can you discuss the cadence of margins and EPS in the back half of the year? - Management noted that while they expect a lower absolute dollar productivity delivery in the second half, they remain focused on driving profit dollar growth margins [15][20] Question: What are the expectations for the North American pricing environment? - The pricing environment remains stable, with a focus on volume and mix-driven growth, while maintaining pricing net of input cost discipline [41][72] Question: Can you elaborate on the savings from the supply chain transformation? - The majority of savings will come from supply chain transformation strategies, including value stream simplification and overhead reductions [55][56] Question: How is the promotional environment affecting the tissue business? - Management acknowledged increased promotions in some categories but emphasized a focus on profitable growth rather than over-promotion [97] Question: What is the outlook for volume improvement in the tissue category? - Management expects positive volume growth over time, particularly in North America, as they shift emphasis to volume and mix-driven growth [98]