Sales Reports


January 1, 2006

Location: Dallas, TX

Sales: $1.2 billion

Description: Key Personnel
Thomas Falk, chairman and CEO; Rosalind Brewer, president, Global Nonwovens Operations and Technology and Mark Foreste, vice president, Partnership Products Business

Corinth, MS; Balfour, NC; Lexington, NC; LaGrange, GA; Neenah, WI

ISO Status
Certification achieved in Lexington, NC and LaGrange, GA; other facilities in progress

Spunbond, meltblown, SMS, BCW, hydroentangled and Coform

Brand Names
Accord fabrics, Blockit protective fabric, Breeze facemask media, Cyclean filtration media, Dustop protective fabric, Evolution 4 protective fabric, Fathom filtration media, Intrepid filtration media, Matrix protective fabric, Noah protective fabric, Powerloft filtration media and QuieTech acoustic media

Major Markets
Filtration, acoustics, furniture, hygiene, industrial, medical, packaging, protective, sorbents, textile linings and wet wipes

For Kimberly-Clark, one of the world’s largest roll goods producers, 2005 was a good year with external material sales exceeding the company’s expectations. “We were up over last year and certainly saw a considerable improvement from 2004 to 2005 across all major markets,” reported J.C. Sneyd, director of marketing and sales for K-C’s nonwovens business. “We enjoyed nice growth in all of our segments. It’s an exciting time for us and everyone feels good about the direction we’re heading in.”
The company largely attributes last year’s growth in external material sales to the strong performance of the producers and converters it supplies. “I have to credit our customers for this growth. Although we added some new customers, our existing customers did very well last year and this organic growth was instrumental in our upwards sales trend,” Mr. Sneyd said.
The percentage of K-C’s total nonwoven capacity targeting external markets remains at about 15% while 85% is used internally to supply the company’s huge consumer and medical products businesses and leading brands such as Huggies disposable diapers and training pants, Depend adult incontinence products and Kotex sanitary protection items. The ratio of K-C’s nonwovens usage to internal/external business areas has been fairly steady for quite a few years in spite of capacity increases and the fact that its machines are kept evergreen.
Commenting on the state of the global nonwovens industry, Mr. Sneyd pointed to the commoditization of spunbond and meltblown fabrics as an obvious trend.
K-C’s response to this has been continued product differentiation with more focus on attribute uniqueness.

“There are a lot of people investing in commodity-grade products. Spunbond, SMS and plain vanilla meltblown have become fairly commoditized and it’s then just a question of who can sell it at the lowest price. We, on the other hand, tend not to concentrate on the generics but instead on differentiation through unique products. One key reason our customer base has been so loyal to us is precisely because of the uniqueness of the products we provide. This is where our growth is. This has been an important strategy for the sales of our external materials business for some time and we’ve been pleased with our results,” he said.
Capital improvements and expansions were ongoing last year at K-C’s worldwide facilities, including some upgrades to nonwovens facilities as well as at select consumer mills that have been targeted for growth. Mr. Sneyd declined to offer further details on these initiatives.
K-C is also continuing to make progress with previously announced plans to aggressively reduce costs by streamlining manufacturing and administrative operations primarily in North America and Europe. The efforts are expected to create a more competitive platform for growth and margin improvement. To date, employees have been notified about workforce reductions and other actions at 19 of the approximately 24 facilities slated for sale, closure or streamlining as part of cost reduction initiatives. The cost-cutting moves are designed to save between $300 and $350 million annually in the face of increased global competition.
These competitive improvement initiatives have done little to slow the consumer products business at K-C, which rolled out several new product innovations in 2005 and 2006. New personal care products extend both the Pull-Ups brand and the Huggies Clean team toiletries line. In June K-C launched two new solutions for potty training—new Pull-Ups training pants with Cool Alert and Pull-Ups Night Time training pants. Pull-Ups training pants with learning designs have vibrant underwear-like graphics and designs that fade when wet.
Also new this year is the Cottonelle for Kids product line, the first-ever combined dry bath tissue and moist wipes system designed to help parents teach good bathroom and hygiene habits.
In its professional sector, 2005 brought on the introduction of a full line of facemasks, coveralls and other protective gear targeting both the “do-it-yourself” segment and the even faster growing “do-it-for-me” professional market. Later this year, K-C Professional will unveil a cut- and chemical-resistant version of its successful Kleenguard Purple Nitrile gloves.
In addition to new product development, further globalization and expansion into emerging markets continues to be an effective strategy for K-C’s consumer products business. In developing and eemerging markets, personal care sales continue to rise, in fact, K-C has posted double-digit growth for seven quarters in a row.
Another recent consumer product highlight is the inaugural shipment of Gen2 RFID-tagged cases of products to Wal-Mart. This next step in the implementation of RFID technology is a result of K-C’s extensive research and testing on the compatibility of Gen2 hardware and software with conveyor, packaging, logistics and shipping systems in the company’s dedicated Auto-ID research lab in Neenah, WI.
Kimberly-Clark has been a pioneer and proponent of using RFID technology to address and improve two of the retail industry’s toughest business challenges—out-of-stocks and global standardization of supply chain systems. This initial roll-out and use of Gen2 hardware and software is K-C’s first step in fully incorporating the Gen2 platform.
K-C’s nonwovens business unit—formerly known as the Nonwoven Fabrics Business—changed its name this year to Kimberly Clark Partnership Pro­ducts. The new name is a reflection of the company’s capabilities outside of the roll goods arena. “We not only supply roll goods, we are also active in providing converted solutions for our customers,” said Mr. Sneyd who explained that K-C converts some of its own products and outsources some converting projects as well.
The name change is also part of an effort by the business unit to differentiate itself from companies that strictly sell commodity roll goods. “We have developed some very unique products, which companies are taking to market. We are interested in selling unique roll goods that target specified application areas. In every case, either the products themselves or the materials are patent protected,” Mr. Sneyd said. He added that converted products are a fairly significant growth area for K-C where the company supplies many new customers. “Roll goods also continue to grow for us,” he added. “In fact, in the segments we participate in, we are growing faster than the market itself,” he added.
Heading into 2007, K-C is optimistic and looks forward to reaping the benefits of future partnerships with key industry players. “We have enjoyed very good success in providing unique roll goods and one-of-a-kind finished products,” Mr. Snedy concluded. “We are going to continue to experience growth through our partnerships with large-scale, highly recognizable companies, which are a very key part of our success.”"

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