uploads///KMB Segments

Kimberly-Clark’s Personal Care Segment Is Still Important

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Jul. 19 2017, Updated 7:38 a.m. ET

Personal care segment

For Kimberly-Clark (KMB), two of its three business segments showed improvements in the past two consecutive quarters. Notably, its personal care business has been the catalyst for its overall sales growth. Kimberly-Clark’s personal care segment accounts for most of its total sales. The segment is expected to remain strong and drive top line growth. The segment witnessed 1.0% growth in 4Q16, while growth improved 2.0% in 1Q17. Its growth reflects higher volumes and favorable currency movements. Given the category’s upbeat performance, management thinks that personal care will be its fastest growing segment in 2017.

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During the last reported quarter, personal care sales remained soft in North America due to the lower performance in the infant and child care and feminine care business. However, given the planned launch of the new and innovative product, the segment’s sales might recover in the region. In the developing and emerging market, volumes are expected to remain healthy. However, lower net selling prices in China (FXI) and Europe could continue to be a drag.

In comparison, peers Colgate-Palmolive (CL) and Clorox (CLX) are also witnessing improved volumes in their personal care business.

Consumer tissue will be a drag

The company’s consumer tissue segment continues to be a drag. The segment saw lower sales as volumes fell, while average selling prices remained low. Going forward, volumes are expected to remain soft in this segment. Meanwhile, lower net selling prices and a negative product mix could pressure organic sales growth.

KCP sees a recovery

The KCP (Kimberly-Clark Professional) segment is showing signs of improvement, although at a slower rate. The segment is expected to report improved sales in the coming quarters. It’s benefiting from higher selling prices and a favorable product mix.

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