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KMB > SEC Filings for KMB > Form 10-Q on 5-Nov-2012All Recent SEC Filings

Show all filings for KIMBERLY CLARK CORP

Form 10-Q for KIMBERLY CLARK CORP


5-Nov-2012

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Introduction
This management's discussion and analysis of financial condition and results of operations is intended to provide investors with an understanding of our recent performance, financial condition and prospects. The following will be discussed and analyzed:
Overview of Third Quarter 2012 Results

Results of Operations and Related Information

Liquidity and Capital Resources

Legal Matters

Business Outlook

Overview of Third Quarter 2012 Results
Net sales decreased 2.5 percent primarily due to unfavorable currency effects partially offset by increases in net selling prices and sales volumes.

Operating profit and net income attributable to Kimberly-Clark Corporation increased 18.3 percent and 19.7 percent, respectively.

Net income includes $16 million in after tax charges ($31 million pre-tax) in 2012 and $66 million in after tax charges ($95 million pre-tax) in 2011 for the pulp and tissue restructuring actions.

Cash provided by operations was $844 million compared to $750 million in the prior year. The improvement was driven by higher cash earnings and a smaller increase in working capital than in the year-ago quarter, partially offset by higher defined benefit pension plan contributions.


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Results of Operations and Related Information This section presents a discussion and analysis of our third quarter of 2012 net sales, operating profit and other information relevant to an understanding of the results of operations.
Third Quarter of 2012 Compared With Third Quarter of 2011

Analysis of Net Sales
By Business Segment
Net Sales                          2012              2011
                                (Millions of dollars)
Personal Care              $      2,414            $ 2,390
Consumer Tissue                   1,605              1,711
K-C Professional & Other            822                863
Health Care                         396                407
Corporate & Other                     9                 11

Consolidated               $      5,246            $ 5,382


By Geography
Net Sales                   2012            2011
                           (Millions of dollars)
North America           $    2,688       $  2,740
Outside North America        2,763          2,838
Intergeographic sales         (205 )         (196 )

Consolidated            $    5,246       $  5,382


Commentary:
                             Percent Change in Net Sales Versus Prior Year
                                                  Changes Due To
                          Total       Volume       Net       Mix/
                          Change      Growth      Price      Other    Currency

Consolidated              (2.5)         1           1          -        (5)
Personal Care              1.0          4           2          -        (5)
Consumer Tissue           (6.2)        (1)          -          -        (5)
K-C Professional & Other  (4.8)         -           -         (1)       (4)
Health Care               (2.7)        (1)          -          -        (2)

Personal care net sales in North America were even with year-ago levels. Net selling prices rose 2 percent, driven by improved revenue realization for Huggies diapers, while overall sales volumes decreased 2 percent. Infant care volumes were down high-single digits, primarily reflecting category declines and modest consumer trade-down. Feminine care volumes were down mid-single digits compared to strong a year-ago performance. Child care volumes increased at a low double-digit rate, as the comparison to the prior year benefited from soft training pant volumes last year, along with higher shipments of Good Nites youth pants and Huggies Little Swimmers swim pants in 2012. Lastly, adult care volumes increased low-single digits, including benefits from the introduction of the Poise feminine wellness line-up.

In our international operations in Asia, Latin America, the Middle East, Eastern Europe and Africa ("K-C International"), personal care net sales increased 2 percent despite a 9 percent decrease from unfavorable changes in currency rates. Sales volumes were up 9 percent, with high-single digit to low-double digit growth in each major region. Volume performance was strong in a number of markets, including Brazil, China, Russia, South Africa, South Korea and Venezuela. Overall net selling prices improved 2 percent compared to the year-ago period, driven by increases in Latin America.


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In Europe, personal care net sales decreased 2 percent, including an unfavorable currency impact of 11 percent. Sales volumes rose 9 percent, mostly due to growth in non-branded offerings and Huggies baby wipes.
Consumer tissue net sales in North America were down 5 percent compared to the prior year, including a 5 percent decrease from lost sales in conjunction with pulp and tissue restructuring actions. Organic sales volumes (i.e., sales volume impacts other than lost sales from restructuring actions) increased 3 percent, as gains in bathroom tissue were partially offset by lower volumes in paper towels. Overall changes in product mix decreased sales 2 percent and net selling prices were down 1 percent.

Consumer tissue net sales decreased 4 percent in K-C International. Currency rates were unfavorable by 8 percent and lost sales in conjunction with pulp and tissue restructuring actions reduced sales volumes by 1 percent. Net selling prices increased 3 percent and both organic sales volumes and product mix increased net sales by 1 percent.
In Europe, consumer tissue net sales decreased 13 percent, including an unfavorable currency impact of 10 percent. Net selling prices decreased 2 percent and changes in product mix reduced net sales 1 percent, as economic conditions remain difficult.
Net sales of K-C Professional ("KCP") & other products in North America decreased 2 percent as net selling prices and sales volumes were each down 1 percent. Although washroom product volumes increased, these gains were more than offset by lower volumes in other areas, including safety products and wipers.

KCP net sales decreased 1 percent in K-C International, including an 8 percent decrease from unfavorable changes in currency rates. Sales volumes increased 4 percent, driven by double-digit growth in Latin America. In addition, overall net selling prices rose 2 percent and product mix improved 1 percent. In Europe, KCP net sales decreased 17 percent. Currency rates were unfavorable by 10 percent and lost sales in conjunction with pulp and tissue restructuring actions reduced sales volumes by 4 percent. Organic sales volumes decreased 2 percent, primarily due to challenging market conditions in Southern Europe. Overall net selling prices decreased 1 percent.
Net sales of health care products decreased 3 percent as unfavorable currency effects reduced net sales by 2 percent and sales volumes decreased 1 percent. Surgical and infection prevention (medical supply) volumes were down slightly compared to double-digit growth in the year-ago period. Medical device volumes decreased 1 percent.

Analysis of Operating Profit
By Business Segment
Operating Profit                      2012           2011
                                     (Millions of dollars)
Personal Care                     $     436       $     396
Consumer Tissue                         216             206
K-C Professional & Other                144             127
Health Care                              59              56
Corporate & Other(a)                    (77 )          (140 )
Other (income) and expense, net          (5 )           (17 )

Consolidated                      $     783       $     662


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