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How Kimberly-Clark’s Segments Performed in 1Q17



Personal care drove top-line growth

Kimberly-Clark’s (KMB) two business segments are showing signs of improvement, as you can see in the graph below. The personal care segment, which accounted for ~50.0% of the company’s total sales in 1Q17, continued to post healthy sales growth. After rising about 1.0% in 4Q16, the segment’s sales marked a 2.0% improvement in 1Q17, driven by increased volumes and a currency tailwind. Management expects the personal care segment to be its fastest-growing segment in 2017.

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The segment’s sales remained soft in North America due to lower volumes in infant and child care and feminine care. Sales remained strong in the developing and emerging markets, which saw volumes rise 9.0%. Favorable currency benefited the top line by 3.0%. However, lower selling prices in China and Eastern Europe partially offset the positives stemming from volume gains.

The personal care segment remains the key behind volume growth of consumer product companies. For instance, Colgate-Palmolive (CL) and Clorox (CLX) witnessed higher volumes during their last reported quarters, driven by a rise in personal care segment volumes.

Consumer tissue segment remains a drag

The consumer tissue segment, which accounted for about 33.0% of the company’s 1Q17 sales, fell 3.0% in sales due to a 2.0% fall in volumes and lower selling prices. The segment’s sales fell 6.0% in North America as increased competition and lower promotional shipments dragged down sales in the bathroom tissue segment.

Sales in developing and emerging markets benefited from favorable currency movements and increased volumes. However, lower net selling prices remained a drag. In Western and Central Europe, lower net selling prices and an adverse product mix lowered sales.

KCP segment could see recovery

The Kimberly-Clark Professional (or KCP) segment, which accounted for about 17.0% of sales in 1Q17, witnessed a 1.0% rise in sales. Sales fell in North America, driven by a fall in washroom and wiper products. Sales improved in developing and emerging markets, driven by favorable currency movement, higher selling prices, and product mix.

You can get indirect exposure to Kimberly-Clark through the iShares Edge MSCI USA Quality Factor ETF (QUAL), which invests 4.9% of its portfolio in the company.

We’ll take a look at the company’s 1Q17 margins in the next part of this series.


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