Investor Presentation - Kimberly

Leading the World in Essentials for a Better Life
Investor
Presentation
Financial Information
as of December 31, 2015
www.kimberly-clark.com
Highlights
• $19 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 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
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Commitment to Sustainability
A Trusted Brand…Yesterday, Today and Tomorrow
• Sustainability 2022 (K-C’s 150th anniversary) is a commitment to:
– Invest in social programs to help people who lack the basic
essentials in life
– Innovate to extend the life of product and packaging materials
– Reduce pressure on natural resources with development of
sustainable alternatives
• Visit www.kimberly-clark.com/sustainability2022.aspx for
information on our sustainability strategy and performance
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Senior Leadership Team
Thomas Falk
Chairman and CEO
Lizanne Gottung
Senior Vice President and
Chief Human Resources Officer
Maria Henry
Senior Vice President and
Chief Financial Officer
Michael Hsu
Group President of
Kimberly-Clark North America
Sandra MacQuillan
Senior Vice President,
Global Supply Chain
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 KimberlyClark Professional
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Three Global Segments
Personal Care
Consumer Tissue
• Diapers
• Facial Tissue
• Training/Youth/Swim Pants
• Bathroom Tissue
• Infant and Child Wipes
• Paper Towels
• Safety Products
• Incontinence Care
2015 OPERATING PROFIT
17%
17%
50%
33%
• Facial Tissue, Bathroom Tissue
and Paper Towels for
away-from-home use
• Wipers
• Feminine Care
2015 SALES
K-C Professional (KCP)
30%
2015 OPERATING MARGIN
20%
18%
18%
53%
Operating profit and margin exclude corporate and other (income) and expense, net.
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Geographic Breakdown
2015 SALES
50%
50%
North America
Outside North America
2015 OPERATING PROFIT
2015 OPERATING MARGIN
23%
39%
14%
61%
Operating profit and margin exclude corporate and other (income) and expense, net.
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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
Manage portfolio to
balance growth,
margin, cash flow
Invest in brands,
innovation, growth
initiatives
Strategies
Deliver sustainable
cost reduction
Disciplined capital
management to
improve ROIC and return
cash to shareholders
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GBP Objectives and Results
Annual
Improvement
Objective
2004 – 2015
CAGR
Sales
3 to 5 percent
3 percent
EPS*
Mid- to highsingle digits
6 percent
20 to 40
basis points
75 basis points
In line with EPS
8 percent
Organic Sales
ROIC*
Dividend
* EPS and ROIC are adjusted.
3 to 5 percent
4 percent
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Delivering Consistent Organic Sales Growth
• Targeted growth initiatives
ORGANIC SALES GROWTH
• Innovations
• Marketing investments
5%
5%
4%
4%
2013
2014
3%
• Portfolio improvements
• Price increases
(currency/commodity related)
2009-2011 2012
Avg.
2015
10
10
Improving Margins
• Organic top-line growth
GROSS MARGIN*
35.9%
• Significant cost savings
33.4%
• Strategic changes / restructuring
30.9%
• Efficient SG&A spending
2011
2012
34.1% 34.3%
2013
2014
2015
OPERATING MARGIN*
13.5%
2011
* Adjusted.
14.4%
2012
15.4%
2013
16.1%
2014
17.3%
2015
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Business Unit Strategies
PERSONAL
CARE
Win globally in Personal Care
CONSUMER
TISSUE
Deliver targeted growth and improve
margins in Consumer Tissue
K-C
PROFESSIONAL
D&E
MARKETS
Grow in higher margin segments in KCP
Drive rapid growth in Developing & Emerging
Markets (D&E)
– Focus on China, Eastern Europe and Latin America
D&E = K-C’s business in Latin America, Eastern Europe, the Middle East and Africa, and Asia-Pacific, excluding Australia and South Korea.
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Win Globally in Personal Care
• Leverage strong brands
• Innovation supported by integrated marketing campaigns
• Long track record of success
– 12-year organic sales CAGR: +6 percent
PERSONAL CARE SALES
% OF TOTAL COMPANY
50%
39%
2003
2015
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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 profit up 60+ percent over last 5 years
OPERATING MARGIN
11%
2011
14%
2012
15%
2013
16%
2014
18%
2015
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Grow in Higher Margin Segments in KCP
• Provide essentials for a healthy,
safe and productive workplace
• Invest in high-growth, higher
margin Safety & Wiper businesses
• Focus on improving mix and
margin to fund growth
SALES GROWTH
(2010-2015 CAGR Index)
2.4x
1.0x
KCP
Segment
Wipers &
Safety
TOTAL KCP
OPERATING MARGIN
18%
15%
2010
2015
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Drive Rapid Growth in D&E Markets
• Excellent performance over last five
years
– Double-digit organic sales growth
ORGANIC SALES GROWTH*
12%
12%
10%
11%
10%
– Improved operating margin
• Strong market positions
2011
2012
2013
2014
2015
• Attractive market dynamics
• Multi-tier product strategies
• Targeted geographic expansion
and growth plans
• On-going organic sales growth
target high-single to low-double
digits
* 2014 excludes Venezuela.
D&E SALES % OF
TOTAL COMPANY
30%
14%
2003
2015
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D&E Focus Areas:
China, Eastern Europe, Latin America
• Approximately 75 percent of D&E
business
• Innovation in all markets
ORGANIC SALES GROWTH*
15%
13%
14%
12%
11%
• Selling and marketing investments
• Focused distribution expansion
2011
2012
2013
2014
2015
• Increasing manufacturing base to
support growth, improve profitability
• Emphasis on Personal Care and KCP
* 2014 excludes Venezuela.
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Personal Care in D&E Markets
• Delivering consistent double-digit
organic sales growth
ORGANIC SALES GROWTH*
15%
12%
12%
14%
14%
2014
2015
• Personal Care in D&E now nearly as
large as North 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
2011
2012
D&E % OF TOTAL
PERSONAL CARE SALES
39%
18%
2003
* 2014 excludes Venezuela.
2013
2015
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KCP in D&E Markets
• Approximately three-quarters
billion dollars in annual sales;
excellent margins and growth
opportunities
• Expanding where industrialization
and economic development are
occurring
ORGANIC SALES GROWTH
IN D&E MARKETS*
10%
12%
12%
13%
6%
2011
2012
2013
2014
2015
– Including Latin America, Eastern
Europe and China
• Leveraging global brands, go-tomarket capabilities and
sustainability leadership
* 2014 excludes Venezuela.
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Recent Portfolio Changes
• Pulp & Tissue Restructuring (2011 – 2012)
– Exited remaining integrated pulp operations; streamlined tissue
manufacturing; $100 million cumulative operating profit benefit
• European Strategic Changes (2012 – 2014)
– Exited diaper category in most of Western/Central Europe and
some other lower margin or slower growing businesses
– 2015 consumer business margins up 500+ basis points versus 2012
• Health Care Spin-off Creating Halyard Health, Inc. (2014)
– Allows Halyard to optimize performance and flexibility to pursue
value-creation opportunities
– Further sharpens K-C’s focus on growing consumer and KCP
brands
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2014 Organization Restructuring
• Announced October 2014
• Will offset impact of stranded overhead
costs from health care business spin-off
and improve efficiency
RESTRUCTURING
SAVINGS
($ MILLIONS)
$120 - $140
– More flexibility to invest
– Further evidence of cost discipline
$70
• Restructuring costs $130 to $160 million
after tax by end of 2016
– More than 90 percent complete at the
end of 2015
Through 2015
By end of
2017
• Savings delivery on track
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Investing For Growth – Advertising
• Supporting innovation and building brand equity
• Marketing in a digital world – non-traditional channels and
programs
• Improving efficiencies
• Significant increase since 2009
ADVERTISING SPENDING
($ MILLIONS)
$710
$559
2.9%
NSV
2009
3.8%
NSV
2015
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Sustainable Cost Reduction – FORCE*
• Ongoing program
ANNUAL SAVINGS
($ MILLIONS)
– Delivered $2.9 billion over past
12 years
$365
– Accelerated performance in
recent years
$310
• Supply chain focus
– Global procurement organization
$200
– Lean manufacturing practices
– Product cost design
• Created SVP, Global Supply
Chain position in 2015 to build
further capability
• Targeting $350+ million in 2016
* FORCE = Focus on Reducing Costs Everywhere.
2004-2011
Avg.
2012-2014
Avg.
2015
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Working Capital Improvement
• Strong improvement since
2008
PRIMARY WORKING CAPITAL
CASH CONVERSION CYCLE
(DAYS)
– Extending payables terms
– Inventory management
73
– Health care spin-off
(67%)
• Expect continued progress
going forward
– Building further capabilities
• Targeting 1 to 2 day
improvement in 2016
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2008
2015
24
Return on Invested Capital
• Key component of long-term
incentive compensation program
ROIC*
• Excellent progress since GBP
introduction
• Expect additional improvement
in 2016
22.7%
13.7%
2003
* Adjusted.
2015
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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 in Consumer Packaged Goods industry
• 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 CPG industry
• Announced 5 percent increase for 2016 dividend
– 82nd consecutive year K-C has paid a dividend, 44th consecutive annual
increase
• Paid $12+ billion in cash dividends over past 12 years
PER SHARE DIVIDEND
DIVIDEND PAYOUT*
(DECLARED)
$3.52
61%
41%
$1.36
2003
2015
2003
* Declared dividends per share divided by adjusted basic earnings per share from continuing operations.
2015
27
Share Repurchases
• Cumulative share
repurchases of $14.6 billion
2004-2015
SHARES OUTSTANDING
(MILLIONS)
502
• Strong track record of
reducing share count
(28%)
• Targeting $600 million to
$900 million in 2016
361
Year-end
2003
Year-end
2015
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Total Shareholder Returns
Since Launch of GBP (July 2003)
296%
300%
249%
250%
200%
171%
150%
100%
KMB
S&P 500
Total Shareholder Returns through December 31, 2015 – assumes reinvestment of dividends.
S&P Consumer
Staples Index
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To Learn More About Kimberly-Clark
• Contact Investor Relations with your questions
– Paul Alexander, Vice President at (972) 281-1440
• Visit www.kimberly-clark.com/investors to view our annual
report, SEC filings or news releases
• To obtain copies of our 2015 Annual Report on Form 10-K, SEC
filings or news releases, call (800) 639-1352
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Safe Harbor Statement
Forward-Looking Information
Certain matters in this presentation, including our 2016 outlook, expectations and planning assumptions,
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, market demand and economic and political conditions, the
anticipated costs, scope, timing and financial and other effects of the 2014 Organization Restructuring,
the anticipated cost savings from the company’s FORCE program and contingencies and anticipated
transactions of 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
2015 earnings communication which occurred on January 25, 2016. Forward-looking statements speak
only as of the date they were made, and 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, 2015 entitled “Risk Factors.”
Non-GAAP Financial Measures
This presentation contains some financial measures that have been adjusted to exclude certain items
and differ 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. Organic net sales exclude the impact of changes in foreign currency exchange rates and
lower sales as a result of portfolio changes. 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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