Nobody knows noses and bottoms better than Kimberly-Clark. One of the world's largest makers of personal paper products, the company operates through three business segments: personal care, consumer tissue, and K-C Professional. 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 (plus the Scott Naturals line). Kimberly-Clark's professional unit makes WypAll commercial wipes, among other items.
Kimberly-Clark maintains a broad global presence as part of its growth strategy. It boasts some 110 manufacturing facilities in about 40 countries across the US, Canada, Europe, Asia, and Latin America. Products reach about 175 countries.
Developing regions, Asia, Latin America, and others now generate 40% 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.
Amid a slow global economy that has put pressure on cash-strapped consumers and inflated the cost of fuel, pulp, and paper, Kimberly-Clark has managed to hold on to the #1 or #2 position in 80-plus countries. Personal Care accounted for about 50% of total sales in 2014; Consumer Tissue, 34%; and K-C Professional, 17%.
Sales and Marketing
Kimberly-Clark sells its household items directly to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, and other retail outlets, as well as through distributors and e-commerce. For the away-from-home market it serves, the company sells through distributors and directly to high-volume public facilities and to manufacturing, lodging, office building, food service, and health care establishments.
To gain recognition for its brands, the company has averaged about $780 million in advertising expenses each year. In 2014, Kimberly-Clark logged $767 million in ad spending. As business and economic conditions improve, the consumer paper company will spend more aggressively on adverting and promoting its products.
Its largest customer, über worldwide retailer Wal-Mart, represented about 13% of sales in 2014, 2013, and 2012.
Kimberly-Clark's revenues have seen an upward trend over past few years. However, revenues fell 7% to $19.7 billion in 2014, primarily due to the company's spin-off of its health care business. (Note: the company's 2013 financial numbers have been restated due to these discontinued operations.)
Its profits decreased 29% from nearly $2.2 billion in 2013 to $1.5 billion in 2013 due to a bump in other expenses and a decline in income from discontinued operations related to the spin-off of its health care business. The company's operating cash flow declined 6% to $2.8 billion in 2014 due to the lower profits and an increase in cash used in accrued income taxes.
Kimberly-Clark's strategy includes building upon its well-branded position in the personal care and consumer tissue space. 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 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. To get better shareholder returns, in 2014 Kimberly-Clark spun off its health care business into a standalone company known as Halyard Health. To offset $85 million in overhead costs associated with the pending spinoff, the company announced plans to eliminate up to 1,300 jobs by the end of 2015, in an effort to save $120 million to $140 million by the end of 2017.
In 2014 Kimberly-Clark spent $370 million on research and development directed toward new or improved personal care, tissue, wiping, safety and health care products and nonwoven materials.