Nobody knows noses and bottoms better than Kimberly-Clark. One of the world's largest makers of personal paper products, the company operates through four business segments: personal care, consumer tissue, K-C Professional, and health care. Kimberly-Clark's largest unit, personal care, makes products such as diapers (Huggies, Pull-Ups), feminine care items (Kotex), and incontinence care products (Poise, Depend). Through its consumer tissue segment, the manufacturer offers facial and bathroom tissues, paper towels, and other household items under the names Cottonelle, Kleenex, Viva, and Scott (including the Scott Naturals line). Kimberly-Clark's professional unit makes WypAll commercial wipes, among other items.
Amid a troubled global economy that has put pressure on cash-strapped consumers and inflated the cost of fuel, pulp, and paper, Kimberly-Clark manages to hold on to the #1 or #2 position in 80-plus countries. Its largest customer, über worldwide retailer Wal-Mart, represented about 12% of sales in 2011, and 13% in both 2010 and 2009.
The company posted a modest increase in year-over-year sales in 2011. Results reflect sluggish sales in its largest market, North American personal care products, coupled with lower selling prices and a tepid product mix. Volumes were flat despite product innovations to mainstay lines -- baby wipes, adult incontinence, and feminine care. Its top line was buoyed by demand in Europe and in South Korea, China, and Latin America, as well as favorable currency exchange rates. Consumer tissue lines (which generate nearly a third of Kimberly-Clark's sales) across all geographic markets remained strong as did higher sales volumes and sales prices for health care products, such as exam gloves and medical devices. Earnings, however, declined for a second consecutive year, driven mainly by $415 million in pretax charges for restructuring its consumer tissues operations and exiting its ailing pulp manufacturing business. Kimberly-Clark's plan, which aims to bolster profitability, has focused on streamlining or closing half a dozen manufacturing facilities and axing production of mainly non-branded offerings. Most of the restructuring charges are associated with the consumer tissue and K-C Professional businesses in North America, followed by Australia. Although net sales are likely to fall in 2012, operating profit is projected to increase over the next two years thanks to the resulting savings.
Kimberly-Clark is maintaining a broad global presence as part of its growth strategy. It boasts manufacturing facilities in more than 35 countries and products that reach about 175 countries. Developing regions, Asia, Latin America, and others now generate more than a third of the company's revenue due to expansion efforts, such as building a $40 million plant in Singapore, and acquisitions, such as the remaining 31% of its Bogota, Colombia-based subsidiary Colombiana Kimberly Colpapel (CKC). The deal secured the company's foothold in the developing markets of Bolivia, Colombia, Ecuador, Peru, and Venezuela. Kimberly-Clark also holds Kimberly-Clark Kenko Industria e Comercio Ltda, based in Brazil.
Kimberly-Clark's strategy includes building upon its well-branded position in the personal care and consumer tissue space. It typically invests more than $300 million a year in research and development of new and/or improved products. Notable introductions are Huggies Little Movers Slip-On Diapers, Poise Hourglass Shape Pads, and Kleenex Cool Touch Facial Tissue, among several others. The company has simultaneously moved into making higher-margin disposable medical products. It produces sterilization wrap, face masks, surgical drapes and gowns, and closed-suction respiratory products. Its health care unit, which accounted for 8% of 2011 sales, has logged increasingly higher year-over-year sales volumes, helped by acquisitions. Among them, Kimberly-Clark took over Baylis Medical's pain management business, which focuses on chronic spinal pain, and I-Flow, a developer and marketer of drug-delivery systems for post-surgical pain relief and surgical site care.
Mergers and Acquisitions
Kimberly-Clark's Professional business, representing about 16% of 2011 sales, has also benefited from the acquisition of Jackson Products, a maker of welding and work-zone protective gear. The company, known as Jackson Safety, paved the way for Kimberly-Clark to sell safety products in the US and Europe. To boost its revenue further, the professional unit acquired Slovenia-based safety products company Balder in 2012. Specializing in eye and face protection, Balder complements Kimberly-Clark's Jackson Products welding purchase with its own electro-optic device production and research and development activities.
Sales & Marketing
To gain recognition for its brands, the company averages about $650 million in advertising expenses each year. In fiscal 2011, Kimberly-Clark logged $686 million in ad spending. As business and economic conditions change, the consumer paper company will spend more aggressively on adverting and promoting its products.