Kimberly-Clark Corporation (NYSE:KMB) Q1 2018 Earnings Conference Call - Final Transcript

Apr 23, 2018 • 10:00 am ET

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Kimberly-Clark Corporation (NYSE:KMB) Q1 2018 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Lauren Lieberman

it loss leader, but something that drives traffic, bringing in families and et cetera. So I think, that's a category in particular, where they'd be wanting more and more support from their suppliers, rather than less promotional activity?

Executive
Michael Hsu

Yes. Obviously, Lauren, the baby category and mom is very important to retailers, and so they are very focused there. But I do maybe have a different take, which is, I think, a lot of the pricing activity you are seeing may have been promotion-driven versus retailer strategies. And while I think they all want to be competitive on the diaper business, I think, it's in some ways up to us to make sure we are managing the business appropriately in the long term. And in this category, I think, innovation, and creating value add and then premiumizing the category over time is really the best way to grow a fixed consumption category, and that's where we are focused on, and I think lot of the retailers will understand that strategy and approach.

Analyst
Lauren Lieberman

Okay. Thank you.

Executive
Thomas Falk

Thanks, Lauren.

Executive
Michael Hsu

Thanks, Lauren.

Operator
Operator

Our next question comes from Jason English with Goldman Sachs.

Executive
Thomas Falk

Hey. Good morning, Jason.

Analyst
Jason English

Hey. Good morning, folks. Thank you for allowing me to ask a question. Michael, I guess in your prepared remarks early on you talked about increased investment in brands to drive growth. You referenced in the press release pulling back, and if we look at the last few years, if you continue to pull back, it looks like this will be the fifth year in a row that as a percentage of sales, advertising, if not marketing overall, has shrunk. It begs the question of whether or not, you are maybe under investing behind your brands, particularly in the competitive environment. Can you shed your perspective or share your perspective on that, and why we shouldn't be concerned that you may need to reinvest going forward, particularly given the weakening top line, especially in emerging markets? Thank you.

Executive
Thomas Falk

Yes. Thanks, Jason. Obviously, I think as a long term driver, we do want to grow our investments behind the brands. I think that investment comes multiple ways, however. And so I think, overall, I think, we are very balanced on our advertising spend. We have increased our promotional spend, and as we saw the market get competitive towards the back half of last year, we did shed some funds in the both consumer and trade promotion. And as we go forward this year, I think we have got very strong investments, both in terms of product and innovation in China, in North America and in Latin America, and we've strengthened our execution or merchandising investments in the brand.

And Jason, just to build on that. I mean, everything we move to digital coupons winds up being a reduction in net sales and showing up as negative price, even though we might argue, that that's a strategic targeting of an individual consumer.

Analyst
Jason English

Okay. That's helpful. And then, real quick, if