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Kimberly-Clark Reviews Strategies For Continued Growth In Sales, Operating Profit And ROIC At Investor Meeting
Kimberly-Clark Reviews Strategies For Continued Growth In Sales, Operating Profit And ROIC At Investor Meeting
Kimberly-Clark Reviews Strategies For Continued Growth In Sales, Operating Profit And ROIC At Investor Meeting
Global Health And Hygiene Leader Details Increased Emphasis On Innovation, New Products And Sustainable Cost Savings
* Announces Plans for 12.5 Percent Dividend Increase in Early 2005 *
* Sets $1+ Billion Target for Share Repurchases in 2005 *
* Confirms 4Q Guidance in Range of 89 to 91 Cents Per Share *
* Sees Growth From Continuing Operations in 2005 In Line With Long-Term Objectives *
* Sets Three-Year Strategic Cost Savings Target of $400 - $500 Million *

DALLAS, Dec. 6, 2004 -- Kimberly-Clark Corporation (NYSE: KMB) today announced plans to increase its dividend in 2005 by 12.5 percent, to a quarterly dividend of 45 cents per share, subject to final board approval, and to repurchase at least $1.0 billion of its outstanding common stock in 2005. The company also confirmed previous guidance for earnings for the fourth quarter of this year in a range of 89 to 91 cents per share and reaffirmed expectations that Kimberly-Clark will deliver top- and bottom-line growth in 2005 in line with the long-term objectives set forth under the company's Global Business Plan.

The announcements were made at an Investor Day conference in New York City during which Thomas J. Falk, Chairman and CEO, and other members of Kimberly-Clark's senior leadership team met with investors and analysts to review the company's strategies for delivering growth, improving profitability and boosting returns. The executives detailed numerous product innovation and brand-building efforts, strategic shifts in capital allocation and research and development spending, and strategies to improve speed-to-market and to deliver cost savings on a sustainable basis.

Highlights included a review of current and upcoming product launches such as Huggies Bath & Body products, Scott Extra Soft bathroom tissue and Pull-Ups training pants with Wetness Liner; the announcement of a three-year cost savings target of $400-$500 million; discussion of a targeted growth strategy for developing and emerging markets with the focus on opportunities in six countries - Brazil, Russia, India, China, Indonesia and Turkey; and the excellent prospects for growth of the company's Health Care business.

Falk said, "With 60,000 Kimberly-Clark employees squarely focused on our core health and hygiene businesses, this is an exciting moment in the company's proud history. We have the number one or number two market position in more than 80 countries, nearly a quarter of the world's population uses our products every day, and we're home to some of the most well-known and trusted global brands, such as Huggies and Kleenex. We have been executing our Global Business Plan well and generating record cash flow. With this as our very strong position today, accompanied by a deep commitment to innovation, brand-building and sustainable cost savings, we are poised to take Kimberly-Clark to the next level of growth and value creation for our shareholders."

Financial Discipline, ROIC and Sustainable Cost Savings

Mark A. Buthman, Chief Financial Officer, provided insight into the financial discipline that underpins Kimberly-Clark's Global Business Plan. Buthman said, "It's all about balancing growth and profitability to drive improved returns. We're focusing the entire organization on Return on Invested Capital (ROIC), with a goal to improve this important measure by 40 to 50 basis points per year on average, and we are off to a very good start. Through September of this year, ROIC improved to 14.6 percent versus 14.0 percent for the full year of 2003, putting us slightly ahead of our target. We expect to maintain this improvement through the balance of the year, which will give us good momentum heading into 2005 as well."

Buthman said the company is making structural changes to transform its annual drive for cost savings into a long-term strategic priority to lower total delivered cost and improve margins. He outlined the company's new target for cost savings of $400 million to $500 million over the next three years as well as the company-wide FORCE (Focused On Reducing Costs Everywhere) strategies in place to achieve that level of savings.

Buthman also described the benefits of the company's improved approach to capital allocation, noting relatively more capital dollars are being directed to projects that enhance innovation and competitiveness or generate long-term cost savings than toward projects that provide incremental capacity expansions.

New Products, Product Innovations and Line Extensions

Cheryl A. Perkins, Chief Technical Officer, reviewed how Kimberly-Clark has re-engineered its research and development efforts to accelerate growth and innovation - turning customer, shopper and user insights into value-creating total solutions. Perkins said the company is increasing its emphasis on new-to-K-C and new-to-the-world solutions, with 25 percent of R&D dollars earmarked for this purpose in 2005, up from 10 percent in 2003. Specific examples of innovation in action highlighted by Perkins and other group business leaders included:

 

  • Plans to further leverage the Company's proprietary UCTAD tissue technology with the first quarter 2005 introduction of Scott Extra Soft bathroom tissue in the U.S., fulfilling an unmet consumer need for a softer, more absorbent tissue in the value segment of the category.
  • The early January introduction of new training aids to its market-leading Pull-Ups training pants. The company will launch a new line extension, Pull-Ups training pants with Wetness Liner, and will add Learning Designs fading graphics to its existing training pants to provide parents and children with a choice of potty training aids.
  • The current launch of a full line of Huggies Bath & Body products, including the brand's new, proprietary liquid powder that goes on a baby's skin as a liquid and dries as a powder. Kimberly-Clark used its own skin health technology for the majority of the new product formulations, electing to partner with a third-party for the manufacture of several items to increase speed-to-market and reduce capital investment.

Powerhouse in Personal Care

Steven R. Kalmanson, Group President - North Atlantic Personal Care, discussed the current landscape and plans for growth in Personal Care, Kimberly-Clark's largest and highest margin business, which is anchored by such brands as Huggies, Pull-Ups, Kotex, Poise and Depend. Kalmanson detailed several core strategies for growing sales, operating profit and ROIC, including aligning the company's personal care brands into two mega categories (baby/child care and feminine/adult care); increasing share through the introduction of disruptive innovations; and leveraging Kimberly-Clark's global scale by integrating brands, utilizing common technologies, and optimizing manufacturing and equipment productivity.

Moving Toward Total Family Care

Robert P. van der Merwe, Group President - North Atlantic Consumer Tissue, reviewed current activities and future plans aimed at leveraging Kimberly-Clark's position as the number one tissue products company in the world and pursuing growth through the concept of 'total family care.' Van der Merwe noted Kimberly-Clark's strong track record of growing sales faster than category rates through the strength of its brands, technological superiority, continuous innovation and customer development initiatives. Van der Merwe cited the successful launch of Kleenex Anti-Viral facial tissue in the U.S. in late 2004, the continued growth of Andrex bathroom tissue in the U.K. and the company's increased focus on partnering with customers to drive category leadership and growth.

Targeted Growth in Developing and Emerging Markets

Robert E. Abernathy, Group President - Developing and Emerging Markets, shared insights into Kimberly-Clark's targeted approach to growth in developing countries with growing GDP per capita. He said the company is focusing on growth in six high potential markets - Brazil, Russia, India, China, Indonesia and Turkey - where the company has previously invested and has an established presence. Strategies to deliver growth and improve profitability in these markets include leveraging Kimberly-Clark's global brands, scale and proprietary technologies; employing a multi-tier product approach to spur market penetration; and replicating successful tactics employed by strong K-C businesses in Australia, Korea, Israel and Central America.

Growth Opportunities in B2B

W. Dudley Lehman, Group President - Business-to-Business, discussed recent results and strategic direction for Kimberly-Clark's B2B group, which focuses on delivering health and hygiene to the away-from-home marketplace. Lehman noted that the key to success in B2B is similar to that of the company's consumer businesses: gaining superior insights into the needs of end users and turning those insights into branded product solutions that drive profitable growth. He outlined the group's portfolio strategy of growing its Health Care business, maintaining or improving its market position in its K-C Professional business while improving returns, and pursuing selected growth opportunities in nonwoven fabrics.

Global Business Plan on Track for 2005

Reviewing Kimberly-Clark's Global Business Plan and progress against it, Falk confirmed that key measures in 2005 are expected to be in line with long-term objectives. Those targets include annual sales growth of 3-5 percent, which will result largely from volume improvements in 2005. Falk said growth in earnings per share from continuing operations in 2005 is expected to be in the mid- to high- single digits, or a range of $3.70 to $3.85, compared with anticipated earnings from continuing operations of $3.52 to $3.54 per share in 2004. The 2005 outlook is consistent with the company's long-term target for bottom-line growth and in line with external estimates assuming an adjustment of 12-15 cents per share related to the recently completed spin-off of Neenah Paper.

Audio Replay and Presentation Slides

An audio replay of the proceedings, including a question and answer session following the principal presentations, is available by visiting the Investors section of Kimberly-Clark's web site at www.kimberly-clark.com. Also available at the same location are downloadable copies of the slides accompanying the presentations as well as details regarding the company's planning assumptions for 2005.

About Kimberly-Clark

Kimberly-Clark and its well-known global brands are an indispensable part of life for people in more than 150 countries. Every day, 1.3 billion people - almost a quarter of the world's population - trust K-C brands and the solutions they provide to enhance their health, hygiene and well being. With brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend, Kimberly-Clark holds the No. 1 or No. 2 share position in more than 80 countries. To keep up with the latest K-C news and to learn more about the company's 132-year history of innovation, visit www.kimberly-clark.com.

Certain matters contained in this news release concerning the business outlook, including new product introductions, cost savings and acquisitions, anticipated financial and operating results, strategies, contingencies and anticipated transactions of the company constitute forward-looking statements and are based upon management's 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 company's results will be as estimated. For a description of certain factors that could cause the company's future results to differ materially from those expressed in any such forward-looking statements, see the section of Part I, Item 1 of the company's Annual Report on Form 10-K for the year ended December 31, 2003 entitled "Factors That May Affect Future Results."