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K-C Unveils Fourth Quarter Results

January 22, 2010

K-C's sales up 8.4% to $5 billion.

Personal care products powerhouse Kimberly-Clark reported $5 billion in net sales for the fourth quarter of 2009, a hike of 8.4%. Organic sales rose nearly 3%, driven by higher sales volumes of about 2% and increased net selling prices of approximately 2%, while changes in product mix were unfavorable by about 1%. The organic sales growth was highlighted by double-digit increases for the company’s global Health Care business and for K-C’s international operations in Asia, Latin America, the Middle East, Eastern Europe and Africa.

In the personal care product segments, sales increased 11.5% compared with the fourth quarter of 2008. Sales volumes rose 5%, changes in currency rates added another 5 points to sales, and higher net selling prices contributed 2 points of growth in the quarter, while product mix was off 1%.

Personal care sales in North America increased nearly 1% versus the fourth quarter of 2008. Sales volumes advanced more than 3% and currency effects added an additional point of growth, while net selling prices fell approximately 3% due to increased promotional activity. Sales volumes for Huggies diapers rose 6% and market shares improved by approximately 1%. Year-ago results for Huggies diapers were negatively impacted by customer inventory adjustments and increased consumer demand for lower-priced offerings.

Sales volumes for K-C’s adult incontinence brands rose 10%, with continued benefits from product innovation on the Depends brand launched earlier in the year, and volumes for Kotex feminine care products increased 11%, in part due to promotional activity.

In Europe, personal care sales rose 10% in the quarter, including a currency exchange rate benefit of nearly 8%. Sales volumes rose about 4%, while changes in product mix reduced sales by 1%. The volume gains reflect continued strong performance for Huggies diapers in Central Europe, along with improvement in the company’s four core markets of the U.K., France, Italy and Spain, In addition, sales volumes for Huggies baby wipes increased at a double-digit rate in the fourth quarter.

Increased global demand for face masks as a result of the H1N1 flu virus was responsible for approximately 6 points of organic growth in the quarter.

For the year of 2009, sales of $19.1 billion fell 1.5% from $19.4 billion in 2008, including unfavorable currency effects of about 5%. Net selling prices increased nearly 4%, while organic sales volumes declined about 1%. Full year operating profit of $2,825 million was up 11% compared to $2,547 million in 2008 and up 8% compared to 2008 adjusted operating profit of $2,607 million.

Chairman and CEO Thomas Falk said, “Our fourth quarter results completed a strong year for Kimberly-Clark. In 2009 we delivered excellent performance in the near-term while we maintained our strong focus on doing what’s right for sustainable, long-term growth. Despite the difficult environment, we grew organic sales by about 3% in 2009. At the same time, we aggressively reduced costs, significantly improved profitability and delivered all-time record cash flow. In addition, we increased strategic marketing spending by about $140 million in local currency terms and strengthened our brands with meaningful innovations. We also continued to make progress with our targeted growth initiatives, particularly in our K-C international business and in higher margin, higher growth opportunities in K-C Professional and Health Care.”

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