Chairman and CEO Thomas Falk said, "I am proud of our accomplishments in 2005 in what has been a tough environment. K-C teams executed our Global Business Plan well all year long, enabling us to deliver on our commitments for the fourth quarter and the full year despite significant inflationary pressures. Even though we had to absorb cost inflation of approximately $400 million in 2005—more than double the level expected heading into the year—we stepped up our brand-building efforts, investing about $90 million in incremental marketing and research expenses."
Sales growth for the quarter reflected a 2% increase in sales volumes and a 1% improvement in both net selling prices and product mix, partially offset by foreign currency effects of approximately 1%. Highlights included continued double-digit sales gains in developing and emerging markets as well as strong growth for bathroom tissue, facial tissue and training and youth pants in North America.
Sales of K-C’s personal care products rose 2.4% in the fourth quarter. Net selling prices were up nearly 2% and accounted for most of the increase, while currency rates provided a modest benefit. Overall sales volumes were even with the year-ago period. Pricing improved in all regions except Europe, where the company continues to respond to competitive activity.
Personal care sales in North America were essentially even with the fourth quarter of 2004. Net selling prices moved up about 2%; however, sales volumes and product mix each declined approximately 1%. Although Huggies baby wipes and toiletries and the company's child care and incontinence care brands achieved good volume gains, sales of Kotex feminine care products declined during the quarter, offsetting those improvements.
In addition, diaper sales volumes were down slightly versus a strong performance in the prior year. Late in the quarter, the company reversed most of the price increases for diapers and training pants in the U.S. that had been implemented during the third quarter, matching a move by its major competitor. In Europe, sales decreased 15% and were down about 10% excluding currency. Sales volumes and selling prices were both 5% lower.
Even though diaper volumes were down 4% overall, sales volumes of Huggies diapers in the company's four core European markets—the U.K., France, Italy and Spain—advanced 4%. In developing and emerging markets, personal care sales jumped 13%, driven by strong volume growth and currency benefits in Latin America, along with higher selling prices and improved product mix in all regions.