Kimberly-Clark Corporation (NYSE:KMB) Q3 2017 Earnings Conference Call - Final Transcript
Oct 23, 2017 • 10:00 am ET
(Operator Instructions) Ali Dibadj, Bernstein.
I have a few questions. One is, if you can talk about kind of the recent top line organic results you delivered in the context of the longer-term 3% to 5% organic range? And what you see is the gaps, whether it'd be particular geographies or particular business units that you need to close and, I guess, your comfort with that? That's the first question.
I think a couple of comments, first on overall category growth. When you've got the birthrate going negative in big markets like the US and major negative in South Korea, we'd guess the birthrate's down 7% to 9% year-to-date in Korea, which we have a hard time explaining, to be honest, and don't think that's sustainable. On the other hand, it is what it is and those babies aren't born this year and they won't be in the category next year or the year after that. So category weakness is certainly there in a couple of big markets.
And then we had negative one price, which is pretty similar in the first half and the third quarter as you had pricing that went in as a result of currency in some places like Russia and Brazil last year that's coming out as those currencies have turned around and a generally more competitive price environment, even in markets like the US, as the same number of competitors are chasing lower growth or lower category. So, we still think the 3% to 5% is the right long-term growth opportunity. We've got good growth as emerging markets develop. But I'd say, certainly this year, that has been tough to go find.
And just on that, I mean, if you think about all those drivers, are they going to get better in 2018 at this point, or do you just have no visibility into that? Because it certainly doesn't -- it feels like it's a pretty far reach to get anywhere near the 3% to 5% range, even next year.
We'll give you '18 guidance in January, but I'd say your instinct is right, that it -- we don't -- we're not planning for it to snap back. We would expect -- I mean, again, the babies that aren't born this year aren't going to be in the diaper category next year either. So -- and I think, as we understand, much of it is a millennial thing, where they're having kids a little later. Is there -- what else is going on in Korea that might be affecting it? What's the path forward as to how those recover? Those are all things that we'll be looking at. But again, I would expect it's going to be another challenging year from a growth standpoint in 2018. At least that's what we're planning for at this stage.
And then just if I may, just the last question. Given what we're seeing on private label trends, what's your stance on manufacturing private label for other retailers than