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 (plus 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 has managed to hold on to the #1 or #2 position in 80-plus countries.
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 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.
Thanks to a 5% increase in sales from the personal care segment, Kimberly-Clark logged a 1% increase in net sales in fiscal 2012 as compared to 2011. Personal care net sales in North America rose 2% due to higher prices and improved revenue realization for Huggies-brand diapers and baby wipes. In K-C international, personal care net sales rose 8% driven by high sales volumes, particularly in Brazil, China, Russia, South Africa, South Korea, Vietnam, and Venezuela.
Net income for the same reporting period rose 9%, attributable to the increase in consolidated operating profit, which was spurred by increases in net sales, cost savings, and deflation in input costs. Net income gains, however, were partially offset by increased spending on marketing, research, and general expenses. Research and development expenditures focus on creating new or improved personal care, tissue, wiping, safety, and health care products and nonwoven materials. Consolidated research and development expenses for 2012 were $356 million.
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, which accounted for 8% of 2012 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
In 2014, Kimberly-Clark announced it will spin off its health care business into a standalone company known as Halyard Healthy. (The spinoff, which will cost Kimberly-Clark about $85 million, is slated to become effective at the end of October.) To offset overhead costs associated with the pending spinoff, in October the company announced it will 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.
Kimberly-Clark's Professional business, representing about 16% of 2012 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 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 $650 million in advertising expenses each year. In fiscal 2012, Kimberly-Clark logged $810 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 12% of sales in 2012 and 2011, and 13% in both 2010 and 2009.