Sales: $1.3 billion
Description: Partnership Products and K-C
Roswell, GA 30076
Thomas Falk, chairman and CEO; Jan Spencer, president, K-C Professional global; Drew Barfoot, vice president, K-C Professional North America; Mark Foreste, vice president, Partnership Products and K-C Professional Washroom; Bob Stargel, vice president, Global Nonwovens
Corinth, MS; Balfour, NC; Lexington, NC; LaGrange, GA; Neenah, WI, Barton; Upon Humber, U.K.; Tlaxcala, Mexico; Yuhan-Kimberly, Korea, Albury; Australia; Conway, Arkansas, Maumelle, Arkansas, Flint , Wales-U.K., Bogotá, Columbia
Certification achieved in Lexington, NC and LaGrange, GA; other facilities in progress
Spunbond, meltblown, SMS, BCW, hydroentangled, Elastics, Film Laminates, Bicomponents, Airlaid and Coform
Blockit protective fabric, Cyclean filtration media, Dustop protective fabric, Evolution 4 protective fabric, Fathom filtration media, Intrepid filtration media, Noah protective fabric, Powerloft filtration media and QuieTech acoustic media,
Filtration, acoustics, hygiene, industrial, medical, packaging, protective, sorbents, textile linings and wet wipes
For Kimberly Clark, 2007 was “very solid” with year-over-year growth. Corporate-wide sales reached $18.3 billion last year, up from $16.7 billion in 2006 as a result of a 4% increase in sales volumes, improvements of approximately 1% in both net selling prices and product mix and favorable currency effects of nearly 3%. Operating profit was $2.6 billion compared with $2.1 billion in 2006.
On the roll goods end, the company’s Partnership Products business reported continued sustained market growth across the board. Many of the business’ absorbent and specialty materials are supplied by K-C’s Global Nonwovens team and are used in air filtration, liquid contaminant removal, automotive protection and residential and institutional cleaning.
The percentage of K-C’s total nonwovens capacity targeting external markets remains at about 15% while 85% is used internally to supply the company’s huge consumer, B2B 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.
According to J.C. Sneyd, director of marketing and sales for K-C’s Partnership Products business, the year brought a significant amount of organic and new customer growth. “It was a combination of both,” he said. “Our customers did exceedingly well last year, all achieving solid growth.”
Mr. Sneyd characterized the company’s customer base as “educated” and “understanding” in light of the increasing raw material and energy costs hitting the industry. “Our customers are as committed as we are—they aren’t fickle. Once they are on board, they stay.” As for new customers, Mr. Sneyd drew a similar picture. “Even as we take on new customers, they quickly become long-term relationships.” He added that, throughout the company, there is minimal turnover among K-C’s veteran staff, from R&D to manufacturing to sales.
Surprisingly, in 2008, despite tough economic conditions, K-C has not seen a drop-off in terms of orders. Mr. Sneyd partially attributed this to the fact that the segments K-C participates in are less affected by shifts in the external market. “Our focus is on more unique products rather than commodities. We are very fortunate to be in a good situation while some people out there are having a very tough year.”
He went on to say that the company has benefited from its mutually honest partnerships with customers. “People expect honesty and they get it—we don’t play games. We expect the same from them and this is a good position to be in. The magnitude and longevity of our company helps; this may be why we have such a committed customer base. Our customers believe that we are going to be there for the long run.” Mr. Sneyd added that this kind of relationship is fostered by K-C being more than just a nonwovens company. “People see us as more than just nonwovens,” he said.
The big news this year for the Partnership Products business centered on its incorporation into K-C Professional at the close of 2007. “The move has helped our business quite a bit,” stated Mr. Sneyd. “We are much bigger and part of a global business now.” He went on to describe the consolidation as a very positive move for both businesses due to a variety of beneficial synergies.
When it comes to manufacturing facilities, all of the company’s nonwovens plants are running at full capacity levels without downtime. The decision to close its Neenah mill was reversed last August as a result of continued demand. “We plan to keep this mill running, as it meets too much demand that can’t be taken up by other mills,” Mr. Sneyd said. K-C had announced in July 2006 that it would sell or close the facility by the end of 2008. As planned, the mill continues to operate those assets used in the production of synthetic materials for K-C’s consumer and B2B products.
K-C’s core roll good market sales, driven by unique nonwoven processes, all reported satisfactory performance and solid year-over-year growth. In filtration and delivery systems, K-C saw both organic and new customer growth while the sorbents and personal care areas expanded mostly as a result of customers’ rapid growth. “All four of these market segments are a true joy to work in,” commented Mr. Sneyd.
K-C has also been busy recently targeting new markets with its external nonwovens business. “We are working on novel concepts that are quite impressive,” he said. “We have already created proto-type products that are going through the patent protection process.” Mr. Sneyd declined to offer any other details on the innovations.
In terms of its global assets, K-C has kept busy on several fronts. In South Africa, the company plans to purchase the remaining stake in its South African subsidiary, Kimberly-Clark of South Africa, from The Lion Match Company (Proprietary) Limited, a wholly-owned subsidiary of FASIC Investment Corporation Limited. K-C currently owns slightly more than 50% of K-CSA. The transaction, which is subject to approval by the Competition Commission, is expected to close in 2008. K-CSA has operated as a joint venture between K-C and Lion Match, or predecessor companies, since 1955.
“Our increased ownership in this successful affiliate bolsters K-C’s presence in the country and enhances our growth potential in sub-equatorial Africa,” said Tom Davis, president of Kimberly-Clark Middle East, Eastern Europe and Africa. “We have an excellent leadership team in place and this transaction gives us greater flexibility in how we execute our strategies for this region.”
On the South American front, K-C plans to invest $60 million in Peru, becoming the first big U.S. company to say it will expand in the country since it signed a free-trade pact with the U.S. in December. K-C expects to double production in the country by expanding existing diaper and paper plants, making Peru a regional center, supplying Chile, Bolivia and Ecuador. Peru’s economy, one of the fastest growing in the world, grew some 8.5% last year.
In the area of sustainability, K-C’s Environmental Vision 2010 program is faring well and the company is now underway with a 2015 program. Through its Vision 2005 program, K-C improved energy efficiency by 19%, water efficiency by 29% and reduced the percentage of waste landfilled by 30%. To help it achieve its Vision objectives, K-C looks to do business with suppliers whose environmental programs are compatible with K-C’s and who can provide the company with products and solutions that move it closer to its goals.
“What we are doing in sustainability is just fantastic. I can’t go into all of the programs, but we are doing some amazing things in sustainability all along the supply chain from fiber to finished product.” He added that the company has a lot of people working on sustainability across all sectors. “We are working with fiber suppliers; we are working on our own manufacturing process and we are working closely with customers on end products. Sustainability is a goal that goes beyond just ourselves.”
As the company moves forward, K-C plans to continue to invest in R&D and novel and unique nonwovens. “We have not been a basic commodity player for quite some time and that will likely not change.. We are very enthusiastic about the new projects we are developing and believe we will bring excitement in the market.”"