Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kimberly-Clark Corp (NYSE:KMB) successfully launched its multiyear Powering Care transformation strategy, setting a strong foundation for future growth.
• The company achieved full-year results that exceeded its long-term algorithm, transitioning from margin recovery to margin expansion.
• Kimberly-Clark Corp (NYSE:KMB) reported strong market share momentum, particularly in North America and China, with significant share gains in key categories.
• The company delivered historical high productivity savings, contributing to its $3 billion five-year target.
• Kimberly-Clark Corp (NYSE:KMB) plans to continue investing in product quality, brand support, and capability building, with a focus on pioneering innovation and strong commercial activation.

Negative Points

• Kimberly-Clark Corp (NYSE:KMB) faces challenges with muted pricing expectations for 2025, relying heavily on volume and mix-driven growth.
• The company anticipates cost pressures, including potential increases in pulp costs, which could impact margins.
• There are concerns about lower frequency of product use in certain markets due to consumer pressures, particularly in Latin America and parts of Asia.
• Kimberly-Clark Corp (NYSE:KMB) is dealing with the impact of retailer destocking and other external variables that could affect growth projections.
• The company is exiting certain markets and business lines, such as Nigeria and private label contracts, which may limit growth opportunities in those areas.

Q & A Highlights

• Warning! GuruFocus has detected 10 Warning Signs with SDMHF.

Q: Can you provide an update on the organizational changes and their impact on growth and innovation? A: Michael Hsu, CEO, stated that the company feels positive about their setup for long-term growth. The categories continue to show durable growth, driven by factors like penetration, frequency, and trade-up opportunities. The company expects to see 2% category growth in the short term and aims for 2-3% volume and mix-driven growth in the long term.

Q: How do you view pricing and volume growth for 2025, especially considering FX pressures? A: Nelson Urdaneta, CFO, explained that pricing is expected to be flat in 2025, with growth driven by volume and mix. The company anticipates continued market share gains and expects volume and mix to contribute significantly to growth, building on the momentum from 2024.

Q: Can you elaborate on the productivity savings and their impact on costs, particularly pulp costs? A: Nelson Urdaneta, CFO, highlighted that the company achieved historical high productivity in 2024, mainly through manufacturing efficiencies. While pulp costs are expected to rise in 2025, the company has strategic supplier relationships to manage volatility. Productivity is expected to remain strong, contributing to cost management.

Q: What are the expectations for SG&A savings and their impact on operating margins? A: Nelson Urdaneta, CFO, mentioned that the company plans to achieve $200 million in SG&A savings over two years, starting in 2025. These savings are expected to contribute to operating margin growth, which is projected to outpace gross margin expansion due to the new organizational structure.

Q: How is the company addressing volume growth in markets beyond the US and China? A: Michael Hsu, CEO, noted that while the US and China are key focus areas, the company is also seeing share gains in other markets like the UK, Australia, and South Korea. The new operating model aims to leverage global scale and accelerate the implementation of growth strategies across different regions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.