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    Kimberly-Clark Corp (KMB)

    Q1 2024 Earnings Summary

    Reported on Jan 10, 2025 (Before Market Open)
    Pre-Earnings Price$128.93Last close (Apr 22, 2024)
    Post-Earnings Price$138.96Open (Apr 23, 2024)
    Price Change
    $10.03(+7.78%)

    What went well

    • Kimberly-Clark reported better-than-expected volume growth despite retail inventory reductions, indicating strong consumer demand and improving market share, especially in North America where they were up or even in 6 of 8 categories.
    • The company's successful innovation and premiumization strategy is driving double-digit growth in China, gaining market share in a declining category, with volumes up double digits against a category down about 10%.
    • Strong productivity gains and cost management initiatives are improving margins, with the company stating they have very good productivity plans and can operate well even in a stable but slightly inflationary input cost environment.

    Q&A Summary

    1. Guidance and Cautious Outlook
      Q: Why didn't you raise guidance after Q1 beat?
      A: Despite a strong Q1, we're maintaining guidance due to ongoing geopolitical challenges and rising commodity costs like pulp increasing in single digits. We prefer a prudent approach given these uncertainties.

    2. Input Cost Inflation Management
      Q: How will you manage rising input costs like pulp?
      A: We see input cost inflation as manageable, expecting net input costs to be around $250 million inflationary for the full year. With our productivity initiatives and improved tools, we can navigate slight inflation and maintain margins.

    3. Productivity and Savings
      Q: Explain the $120M savings and $3B target.
      A: We realized $120 million in non-procurement productivity savings this quarter, part of our $3 billion target over five years. Savings will be roughly linear over this period.

    4. Exiting Private Label Business
      Q: Details on exiting private label production?
      A: We're reducing private label production, which is about 4% of sales, by half by end of 2025 to focus on proprietary innovations. This allows us to invest capital in strategic priorities.

    5. Market Share Gains
      Q: How are market share trends progressing?
      A: We've made solid progress, up in nearly 60% of market categories. In North America, we're up or even in 6 of 8 categories. For example, Kleenex share rose over 400 basis points.

    6. Retailer Destocking Impact
      Q: Impact of retailer destocking on sales?
      A: Retail inventory reductions in Q1 were expected, impacting global sales by about 80 basis points and North America by 170 basis points. Stronger volumes offset this impact.

    7. China Sales Performance
      Q: Is China growth due to market or share gains?
      A: Our China volumes grew double digits, driven by strong execution and share gains, despite the category being down about 10%. We see further opportunities in this fragmented market.

    8. SG&A Investments and Leverage
      Q: Status of SG&A investments and leverage?
      A: We're increasing advertising spend, up 50 basis points this quarter. While we have more to do, we're balancing investments with healthy top and bottom line growth.

    9. Consumer Health and Demand
      Q: How is consumer health affecting demand?
      A: Overall demand is robust, with categories up about 5% in North America. Premium segments are growing strongly, though lower-income consumers show signs of strain.

    10. Early Savings vs. Guidance
      Q: Why not reflect early savings in guidance?
      A: Despite early savings, we're cautious due to uncertainties like geopolitical issues and input costs. Productivity benefits are not linear, and we plan to reinvest in innovation.

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