Download - Sept 2009 Kimberly CLark KMB Presentation
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A Premier Health & Hygiene Company
Back-To-School
ConferenceSeptember 9, 2009
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Agenda
Global Business Plan (GBP)
Strategies and results
2009 Plan and Priorities
Progress update
Q&A
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Headlines
Executing well in a challengingenvironment
Managing factors we control
Protecting and strengthening
long-term health of company
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Global Business Plan Strategies
Balanced approach to growth &profitability to drive ROIC
Portfolio management
Customer, shopper, user focus
Increase speed to market
Sustainable cost reduction
Returning cash to shareholders
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ImprovementObjective
ActualCAGR
Sales 3-5% + 7%
Operating Margin* 40-50 bps - 70 bps
E.P.S.*mid/high
single digits+ 5%
ROIC* 40-50 bps + 10 bps
Dividendhigh single/lowdouble digits
+ 11%
*Operating Margin, E.P.S. and ROIC are adjusted. The reasons why we make these adjustments are in the Investors section of our website at www.kimberly-clark.com.
2004 2008 Results vs. GBP
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2009 Plan
Sales down 4-6% (FX -6% to -7%)
Organic growth 1-2%
Operating margin up 70120 bps
Price realization, cost deflation, costsavings, currency headwind, pensionexpense increase (80 basis point drag)
E.P.S. $4.10 to $4.25
2008 = $4.13
ROIC up at least 20-30 bps
2009 results compared to 2008 adjusted operating margin, E.P.S. and ROIC.
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Increased E.P.S. Outlook in July
April Guidance $4.00 - $4.20July Guidance $4.10 - $4.25
1st Half $1.952nd Half $2.15 - $2.30
Organization optimizationinitiative (15 cent drag)
Volumes down slightly
+Net selling prices
+Cost savings
+Partial FX recovery
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2009 Priorities
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Maximize Cash Flow
Leverage KeyCapabilities
Pursue TargetedGrowth Initiatives
Improve Margins1
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Net selling prices +5%
Cost deflation $255 million Cost savings $128 million, full-year target raised $50 million
Strategic marketing up 30 basis points
Organization optimization severance charges -120 bps
Improve Margins 1
30.2%
32.8%
2008 2009
GrossMargin
(First Half)
13.8%
13.4%
2008 2009
OperatingMargin
(First Half)
2008 margins adjusted.
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Organization OptimizationInitiative
Announced in June
Salaried workforce reduction
Approximately 1,600 positions
Costs $140 - $150 million
Annualized savings $150 million
$60 million in back-half of 2009
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Improveprofitability &
cash flow,provide fundsfor futuregrowth
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Maximize Cash Flow
Strong cash generation
Despite pension contributions(Up $0.4 B vs. 2008)
Significant progress reducingworking capital
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$1.2
$1.7
2008 2009
Cash ProvidedBy Operations
($ Billion)
42%Improvement
First Half
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Working Capital Improvement
On track to exceed 3-dayimprovement target
Inventory reduction focus down
$435 million since year-end Significant production curtailment
SKU rationalization
Improved manufacturing cycle-times
and end-to-end planning
Ongoing programs to improvereceivables collections andpayables terms
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2
73
65
2008Average
1st Half 2009
CashConversion Cycle
(Days)
8-DayImprovement
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Maximize Cash Flow
Capital spending below GBP
4.5% of sales vs. 5-6%
No share repurchases plannedin 2009
Dividend increased 3%
37th consecutive year of increase Top-tier payout, attractive yield
Maintaining
solid balance
sheet andfinancial
flexibility
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Pursue Targeted GrowthInitiatives
Strengthen Baby/Child, Adult,Family Care
Accelerate growth in D&E markets
Build on regional positions ofstrength in Feminine Care
Extend K-C Professional portfolio
Expand Health Care business
ActualOrganic Sales
Growth vs. GBPTarget of 3-5%
4.9%
3.0%
5-Yr CAGRThrough
2008
2009 YTD
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Success in D&E Markets
Organic SalesGrowth
Near-term focus on price realization
Some moderation in volumes
Strong performance continues inhigh-potential markets
Personal Care volumes in BRICITcountries +10% YTD
Optimistic about growth prospectsin D&E
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11%
12%
5-Yr CAGRThrough 2008
2009 YTD
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K-C Professional Safety Business
Increasing presence in higher-margin $17 billion safetycategory
Strong innovation and newproduct results
Jackson Safety acquisition
further expands portfolio Safety business now in excess
of 10% of KCP sales
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Leverage Key Capabilities
Brands
Strength ofbrands
and keycapabilitiesmore
important
than ever
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Strategic Marketing
News drives equity, equity drives growth
Spending increasing
Up about $100 million in 2008
Up nearly $50 million (local currency) YTD 2009
Integrated, media-neutral strategy
Increasing allocation to non-traditional channelsand experiential programs
Supporting D&E growth, innovation
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Product Innovation
Acting on customer, shopper,user insights
Meaningful innovation
Margin accretive
Continuing to innovate acrossbrand portfolio
2009 launches off to good start Supporting with integrated
marketing
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Customer Development
Becoming an indispensable partner
Virtual reality tools
Customer innovation summits
Improving overall supply chain
efficiency
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Summary
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Managing well
in a difficult
environment
Taking steps toensure K-C
emerges a leaner,
stronger, fastercompetitor
Doing whatsright for the
long-term
Confident thatGBP will deliver
shareholder value
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Reminders
Forward-Looking Information
Certain matters in todays presentations constitute forward-looking statements and are based uponmanagements expectations and beliefs concerning future events impacting the company. There can be
no assurance that these future events will occur as anticipated or that the companys results will be as
estimated. For a description of certain factors that could cause the companys future results to differ
materially from those expressed in any such forward-looking statements, see Item IA of the companys
Annual Report on Form 10-K for the year ended December 31, 2008 entitled Risk Factors.
Non-GAAP Financial Measures
In our presentations, we refer to certain non-GAAP financial measures, including adjusted earnings pershare, adjusted ROIC, organic sales and adjusted gross and operating margin. Management believes thatreporting in this manner enhances investors understanding and analysis of the companys performance.
For additional information on why we make these adjustments and reconciliations to comparable
measures under generally accepted accounting principles, see the supplemental information posted to theInvestors section of our web site (www.kimberly-clark.com).
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A Premier Health & Hygiene Company
Q&A