Q1 2020 Earnings Call
Ladies and gentlemen, thank you for your patience and holding we now have your presenters and conference. Please be aware that each of your line is another listen only mode.
The conclusion of the presentation, we will open.
On the floor for questions at the time instructions will be given as to the procedure to follow him. If he would like to ask a question and it's now my pleasure to introduce our first presenter Mr. Paul Alexander. Please go ahead Sir.
Thank you and good morning, everyone welcome to Kimberly Clark's first quarter earnings conference call today, you'll hear from my true.
Our chairman and Chief Executive Officer, and Maria Henry our CFO.
We have a presentation of today's materials in the Investor section of our website as a reminder, we will be making forward looking statements today.
Please see the risk factor section of our latest quarterly report on form 10-Q, and our annual report on form 10-K for further.
A discussion of forward looking statements.
Lastly, what we refer to adjusted results, which exclude certain items described in this morning's news release that release has further information about these adjustments and reconciliations to comparable GAAP financial measures now I'll turn the call over to Mike.
Thank you Paul good morning, everyone.
Rejoin you today during an unprecedented time and we hope all our stakeholders are staying healthy unsafe.
The coven 19 crisis is severely affecting individuals and society at large and its forcing companies like ours to adapt to overcome near term operating challenges.
And uncertainty.
[laughter] Kimberly Clark's vision is to provide the world with essentially for a better life.
And we know where consumers are counting on us now more than ever to fulfill that vision.
We take this responsibility seriously and our teams are working around the clock to ensure our essential products get.
Our consumers who depend on us.
The KC Foundation, and our brands of watch programs to support Cobot 19 relief efforts and thus far we provided donations of more than $80 million to organizations, including UNICEF, the Red Cross any United way.
We're also David donating millions and millions of our products to other organizations.
As a need.
Since the outbreak of Cobot 19, we've taken decisive actions to manage our business effectively through this crisis, we have three key operating priorities.
Priority number one.
Check the health and safety of our employees and our consumers.
Throughout our 100.
Your history. This has never been more important and right now.
[noise], we've taken aggressive action to protect our employees around the world No matter, where they work that includes implementing extensive standardization quarantine and social distance protocols and our manufacturing facilities.
Work from home policies and of course travel.
Frictions.
We're also recognizing our manufacturing employees will well deserved bonuses and appreciation of their efforts.
Pardon number two.
Actively manage our global supply chain to ensure supply of are essential products to our consumers.
Our supply chain teams are meeting multiple times each day.
Hey to affectively navigate the dynamic environment.
They're doing a great job and keeping our global supply chain largely operational in many cases delivering record output.
Well running our assets flat out and greatly simplifying our assortment to improve product availability.
We're working with raw.
Suppliers and distribution partners to ensure continuity and maximize deliveries in some cases, we are incurring additional cost to keep the supply chain rolling.
We have experienced some disruption, including temporary manufacturing slowdowns and shut downs, but none have had material impact to date.
The.
Hi, Jane environment is dynamic and we expect ongoing challenges in the near term. However, we're encouraged with our team's ability thus far to manage effectively in the current environment.
[noise] Party number three prudently manage the business through near term volatility, while continuing to strengthen the long term health of Kimberly Clark.
We'll continue to operate with a balance perspective on both the top and bottom line as we assess both risk and opportunity.
Well continue to invest in our products our brands in our commercial capabilities to maintain the near term health of our business and position us for long term success.
That said, some investment and brand support including.
Promotion activity will be deferred temporarily because it isn't affected more appropriate in the current environment.
[noise] well also manage our discretionary overhead even more tightly.
And as Maria will describe we've taken additional steps to further strengthen our balance sheet and enhance our financial flexibility.
While the environment continues to evolve rapidly our teams are managing our priorities in our business well I'm extremely proud of our entire Casey team and want to express sincere. Thanks for how they are fulfilling our vision.
[noise] Maria will take you through the results of the quarter, but as you can see from the release, we're performing well have a strong balance.
And I delivering solid cash flow.
In a few minutes I'll discuss the outlook and then open the call for your questions, but for now I'll turn it over to Maria.
Thanks, Mike and good morning, everyone first let me Echo Mikes comments and say that I hope everyone is staying healthy in safe during this global health crisis.
I'd also like to thank.
Our 40000 employees for their incredible actions. During this time carry it I've never been more proud to work at this great company.
How we're managing through this crisis is of course, the most important thing right now, but I do want to spend a few minutes previewing our results.
Overall first quarter results reflect both.
Significant volume increases from consumer stock up as well as excellent execution IR team.
We generated strong cash flow and further strengthened our balance sheet. In addition, we continue to invest more in our business and our market share positions are in good shape.
Let me cover some of the details.
Our results.
First quarter net sales were $5 billion, that's up 8% year on year.
Organic sales increased 11%, while currencies, where a two point drag.
Volumes were up 8%, including significant shipments just support consumer stocked out related to the Kobe 19 outbreak.
That stock up occurred in all major geographies and benefited all three business segments in particular can seem or to do.
In addition.
We were off to an excellent start to the year prior to the outbreak with good performance in several areas [noise].
Included premium tier huggies diapers and adult care.
In North America personal care in Asia, broadly, including China and also in Eastern Europe.
Net selling prices in the quarter were up 1% driven by increases taken last year.
Overall, the pricing and promotion environment remained broadly constructive in the first quarter.
[noise] product mix improved 1%, reflecting our strategies to elevate our categories and drive trade up.
[noise], let me pause here and touched briefly on our market share position.
In North American consumer products, our first quarter market shares were up or even in spite of eight categories.
Year on year end up or even in six of eight category sequentially.
In key DMD markets in personal care market shares were up or even year on year in eastern Europe in China and in most categories in Brazil.
Shares were down in some other countries in Latin America, including crew.
Although our position there was stable sequentially.
Overall, our market shares are broadly healthy, which is a good place to be in this environment.
Turning back to the Financial's first quarter adjusted gross margin was 37.2% up 370 basis points year on year.
Adjusted gross profit increased 20%.
We had a strong quarter on cost savings with total savings of $125 million from our forced and restructuring programs.
Commodities were a benefit of $115 million somewhat better than we expected.
Other manufacturing costs were higher.
Year on year.
Foreign currencies were somewhat worse than we expected and reduced operating profit at a high single digit rate.
Between the lines spending was up 100 basis points as a percent of net sales, including a nice step up in advertising spending.
Adjusted operating margin was 19.9.
We spent 250 basis points and adjusted operating profit grew 24%.
The bottom line also benefited from a slightly lower tax rate higher equity income and a lower share count all in all first quarter adjusted earnings per share or $2.13 up 28.
Her sense.
Now, let's turn to cash flow restructuring in the balance sheet.
Cash provided by operations was strong at $704 million compared to a soft quarter last year of $317 million.
The hearing your increase was driven by higher earnings and improve working capital.
Capital spending was $352 million in the quarter, including significant activity related to art restructuring.
Looking ahead, some of our near term capital projects and restructuring activities will be temporarily delayed or reprioritized because of the complexities of managing and the current environment.
Yeah.
We now expect that charges for restructuring program will continue into 2021, rather than wrapping up at the end of this year.
We also expect the charges for the total program will be toward the high end of our previous estimate.
We expect that total restructuring savings.
Savings will be consistent with our previous estimate although it is possible that we won't hit our full target until sometime in 2022.
On capital allocation first quarter dividends and share repurchases totaled approximately $575 million.
We're prudently.
Managing and further strengthening our already strong balance sheet and liquidity position in this environment and our liquidity overall remains robust.
It is also our intention to maintain our single a credit rating three that's temporary period of uncertainty.
We executed to long term debt transactions in the.
Order it first with a $500 million 30 year bond offering that essentially prefunded, a $500 million of notes that will come due in August.
In late March we executed a second transaction.
It's one 750 million dollar 10 year bond offering.
Transaction enhanced our overall liquidity and flexibility and reduced our near term need for commercial paper.
We also continue to maintain chew revolving credit facilities totaling $2.75 billion that we'd never John upon.
We're also temporarily suspending our share repurchase program for at least.
The remainder of the second quarter to provide additional flexibility.
Well continue to monitor the uncertainty in the environment and we'll give you another update on share repurchases in July.
Longer term, there's been no change in our capital allocation strategies.
I'll finish with some perspectives on a currency and commodity.
The markets.
We originally expected that currencies would reduce our net sales by one point this year.
Using first quarter actuals and forward rates at the end of March the headwind would be approximately 4% and rates remain volatile on a daily basis.
For your benefit on a historical.
No basis, the currency impact on our operating profit taking into account both translation and transaction effects has typically been two to three times the impact on our sales.
In addition, our equity affiliate Casey to Mexico is facing many of the same uncertainties that we are including a.
Last week or Mexican peso.
Improving net realized revenue remains one of our strategies to offset currency headwinds. However in this environment much of a new incremental price realization will occur how much I'm, sorry, I had a much incremental price realization will.
Her in the near term, it's more in certain than normal.
On the commodity Friant forward looking trends look favorable although markets remain volatile and as usual cost changes could impact that promotion environment.
Well I'm material markets that can be influenced by oil, including resin have started to move down.
I'm recently, although much less than the decline in oil and where oil goes from here certainly unclear.
Oh recent industry forecast for North America, Eucalyptus market prices are in the lower half of the range. We used to set our full year plan in January which was 908 to $975.
<unk> per metric ton.
So all in all I'm encouraged by our execution in the quarter and our balance sheet, our business fundamentals and our financial health are all strong I'll now hand, it back to Mike.
Okay. Thank you Maria.
Now I'll provide some forward looking perspective.
[noise].
We're focused on ensuring business continuity and we're developing robust contingency plans to address a wide range of scenarios I feel good about where we stand right now, but we're navigating a very dynamic environment.
Due to the lack of visibility and uncertainty about the potential impact of that pandemic.
Food and its potential.
Effects on the global economy, our markets in our supply chain were temporarily suspending are forward looking guidance that was the situation. Progressive then we get more visibility into the impact of the pandemic, we will resume guidance.
Today, our teams have done an excellent job navigating through the volatility however, the inherent.
The ability of dependent creates uncertainty and that makes it difficult for us to assess future outcomes with any precision.
In addition, the volatility and currency commodities and supply chain there are effects on demand and I'll share some perspective on that right now.
[noise] are essential categories have historically performed well in times of economic.
Turbulence.
Consumer our underlying momentum is solid and we're making strong progress on our strategic growth initiatives.
We will continue to support our brands with innovation and marketing near term innovation launches include upgrades in huggies in China, North America and Brazil.
Kotex in eastern Europe, and poison dependent.
North America.
[noise] consumption of the first quarter ran ahead of shipments and as a result, we expect retailers will rebuild inventory and <unk> that we'll see additional volume in the second quarter.
And we're seeing that play out thus far in April.
We expect most but not all of the demand increasing consumer stock up will reverse out.
Out later in the year, however, with more people at home and also paying paying closer attention a personal hygiene, it's likely that consumer tissue consumption will be higher during shelter in place periods.
We're also closely monitoring pandemic, an economic conditions in D. markets, including Latin America, and evaluating how that could impact the health of.
Our consumers and our categories.
Oh shifting the KC professional demand was solid in the first quarter and boosted by stock up activity that occurred in March.
Given the economic shock that's occurred and with much of the population staying at home K C. P is likely to face volume decline starting in the second quarter that will.
Persist until economic conditions returned to more quote unquote normal levels.
We're seeing early signs of that softness thus far in April and impacted end markets are likely to include obviously offices travel lodging high traffic counts, including retail and manufacturing.
No I'd like to conclude with a few important messages.
First we're very confident in the strength the resilience and the overall health of our company.
We're navigating near term uncertainty well and appreciate the commitment of our Casey strong team.
We're managing prudently in the near term and strongly believe it or.
Our ability to create long term shareholder value.
That concludes our prepared remarks, and we'd be happy to take your questions.
Thank you ladies and gentlemen at this time the floors open for your questions. You May ask your question by pressing star one on your Touchtone phone.
We are using a speakerphone. Please make sure that your mute function is to say.
So that you're signaling to reach our equipment again press star one to ask your question.
Our first question comes from Lauren Lieberman with Barclays.
Thanks, Good morning, Hi.
So two different things one was first on K C professional I'm, just hoping it's definitely a.
Lot of people are looking to understand better sort of the mix of that business kind of how much exposure is roughly let's call to you know hospitality versus losses versus manufacturing number one number two kind of what youre market shares are in K C professional versus in the consumer market.
And.
Then three also thinking about the exposure there to more than the cleaning products side of things. The wipers does that some of the safety businesses that you have in there you talk a little bit about that I think it'd be very helpful. Thanks.
Yeah, Thanks, Lauren <unk> I'll point out dog pulmonary and I were all in remote.
Patients are separate location. So there's maybe a little clunky and we amended dual logistics over the phone, but more but regarding your question.
Overall, we do expect some near term volume decline in K C. Professional however, I will say, there's a long term opportune to serve in a very important need as creating healthier workplaces them and focus on hygiene becomes more important going.
However, in the short term I would say the majority of our business is you know the washroom business. That's the largest part of our business overall more than half our business.
And we expect that to be hit, particularly hard by what I just mentioned offices, which are early data shows that office you saw.
It was down about 80%, where we can see that data through our ambition Oh products travel and lodging a significantly down I think hotel occupancy is the latest data we saw we're at 21% of capacity.
An amazingly a ceded restaurant traffic was down 100% globally a in the latest weeks that we could see so.
So there will be an impact there, but I will say, we will see a commensurate or or increases.
In our wipers business, our safety business, which does provide some P and ER and we're ready to make that pivot and actually believed that we can do a better job, helping or you know employers create healthier workplaces.
And then right now in that that white person safety business I think on that Kecy P. website sort of talked about you know we're doing our best to keep up with demand you can just tells a little bit about I think just it'd be educational for people.
What does P.A. eat products.
Our if you are currently running.
Pull out on those businesses.
What growth looks like there because again just trying to sit together that order of magnitude as kt professional being down in the second quarter. It makes perfect sense like how much right and we can all you can give us the tools, we can try to come up with estimates on around of what that looks like.
Yeah, I may ask Paul to jump in but I I will say, maybe the the bigger part of the business that we feel like we can expand right now is on the wafer side.
That's a great business for us and ER and strong performing and we're seeing that a commensurate increase starting to come through now Oh, the safety side. It is a relatively small business for us we.
Don't produce any of the P.B. masks for gloves.
Directly we have those co packed in and so we are in a tight supply situation as everybody else in the world had and ER and so we expect that to grow overtime, but in the near term we're in a tight supply situation [noise], Paul anything to add there yeah. Thanks, Mike.
Good morning, everyone on the call just to level set on Casey piece right product exposure about 65% is tissue based products about 20% is wipers, and then about 10% is RV safety and find different products that Mike mentioned, the safety and scientific products are primarily.
Apparel and gloves with a little bit eyewear as as well masks are earn insignificant.
Part of the business.
Okay great.
And then switching gears to something a bit more strategic in longer term the the.
Mix personal care mix, I think with upstream for de any market, which is really sort of a notable number and I was just hoping if you could talk a little bit about.
Where that's coming from you know referring back to you at the goal to elevate the categories bring innovation. So it seems like there was sort of a step change.
In that.
Happening in the Deeni markets and personal care when he being offered there would be great.
Yeah. Thank you on and then you know first of all say, we remain committed to our Casey 2022 strategy and that strategy is working very well as Maria said, Oh, we felt like we got off to a very good start at the beginning in the quarter and then and then we saw the pronounced lockup effect that's started.
Occurring towards the end of March I'm. So we were very excited about or innovation and commercial programming I think there's a lot of opportunity for us to continue to elevate our categories and also expand our markets or expand the categories in our markets as well or maybe that some of the big pockets, China, notably I think the relieved the team there is doing an excellent.
Navigating both cobot 19, and delivering strong growth at the same time, we were out and the country was down or the our business and our manufacturing was down for about three weeks January February or maybe the first ones, obviously, though to a didn't feel the effects and Ah, but we've been fully online sense.
Organic was up low double digits in the quarter for China overall with strong double digit growth in fem care and a mid single digit growth in diapers and they'd be important thing about diapers is it a minute and I'm very encouraged by the trend is I do believe the category is reverting back to competing on product performance and we.
Feel like we're well positioned ER, we saw Oh sure you know strong share growth and the premium tiers and a strong volume growth in the premium tiers still down a bit in valued but we're managing through that.
Similarly, Panini and central Central Eastern Europe was up.
Hi teens, Brazil.
So I think a low double digits as well so we're seeing very good performance across or do you know the markets, notably Lauren I also would tell you there was much less stock up behavior in the Deeni markets. We're trying to team would say there was none in our categories I do think in Brazil, we saw a little bit in a in consumer tissue.
That's great. Thanks, so much.
Thanks Lorne excellent.
Thank you. Our next question comes from a dollar and most anyone with Morgan Stanley.
Morning, guys good morning.
Hope you're all aware.
So Mike can you just run us through a little more the decision to pull for your guys.
Right and since you spend the share repurchases at least in Q2.
I would just looking for a bit more clarity. There is is it more just sit the external environment. So unknown at this point that it doesn't make sense to have guidance or is there something specific internally as you look at the balance of the year, that's causing concern versus the prior guidance obviously.
I understand the consumer pantry de lever, which you mentioned so not all that Q1 upside sort of flows through but I'm just trying to understand given you seem to have a pretty defensive portfolio you know on the P.S. outlook side, what what drove that.
Decision and then also with repurchases you, obviously seem to be pretty strong liquidity.
The position so just try to understand the motivation behind that.
Yeah, It's Darren the great question, it's definitely the former Oh I think obviously today you know our performance has been strong we feel very good about that we feel confident in our ability to manage in the current environment. However, I think there is there are a lot of unknowns and it's.
As I said in my remarks, it really has to do with.
What the future path of the virus takes and what the what the commensurate impacts gonna be but maybe I'll, let I'll, let Maria comment on maybe both the outlook and also a you know what we're doing with share purchase and all that and then maybe I'll come back with some additional perspective. It then.
Sure.
On the.
On the guidance a yard business is performing well in and we're confident in our strategy and our plans that the volatility and uncertainty in this environment <unk> is is meaningful and nobody really knows at this point what will happen with that cope in 19 in.
Fashion rate.
I'm sorry, if you have we been.
Reading all kinds of happy deeming illogical studies and looking at models and talking to.
Outside folks to try to get some perspective on it but the numbers range anywhere from a 1% to 4%.
Infection rates in north of 50%.
Again, and it's just a nobody really knows what a wet this has in store for asked him let the impacts will be.
And as we think about that and model various scenarios for a business a an increased infection rate could potentially.
In fact, our supply chain a.
Leading worker availability availability if supply.
The the depth and the length of the recession caused by the virus is unknown at this point.
But the length insignificant.
Hi impacts of social distancing, we don't know how long that will last post peak and that obviously FX.
The outlet for our professional business.
And then currency and commodity east have denbury Basel, so with with all of that there's a wide range of scenarios.
Got or potential here and given that the and the lack of certainty around any of those scenarios means we can't confidently provide you with.
An expected range for a 2020 at this point, but we'll continue to monitor the environment when it stabilizes will be in a better positioned to provide forward looking guidance consistent with our past practices.
The same factors that led us to.
Pulled the guidance for the year.
Hi weighed in on suspending buybacks. It's for all the same reasons as she said we are in a very strong liquidity position I mentioned some of the stats in my prepared remarks.
Remarks, the suspension of the buybacks is is really in line with the fact that.
Overall.
Where prudently managing the business given the heightened level of uncertainty right now we'll continue to monitor that quarter by quarter, we'll have more to say to you and not in July when hopefully we have borne visibility.
Both for the outlet for the year, what that could mean for our pan out in our and our.
Cash flows so.
Now I'd sum it up by saying we are prudently managing.
Overall the company in this period of uncertainty in that affects both our view on guidance and our view on the temporary suspension a at least through the second quarter on our buyback program.
Yeah.
Yeah, I Adore, Oh, Paul along which is I think we are definitely encouraged by our start or even the tough environment. Notwithstanding a I think we're we're managing through this uncertain effectively.
As Maria mentioned, you know in our jobs I don't think we ever felt like we would be arguing over.
Vehicle models, and we are and a you know we're working through actually through 11 of them and they all have different assumptions are now well that makes it difficult for us to call. The business for this purpose I will tell you from an operating perspective, we are using those models to predict outcomes to ER to drive scenario planning and potentially plans for.
All of our operations around the world and ER and so we are we've got a great team global team managing the cobot 19.
Prices for us and a very thorough in terms of how we're thinking about it and very proactive about how we're applying learnings as to how we take care of our employees and our consumers and keep operations.
Rolling.
Great. That's helpful and then a if I could ask one other question just the promotional environment you mentioned a pullback in promotion itself. He says a lot of traffic in stores and consumers aren't exactly price shopping as much right now, but as you look forward to the back half of the.
A year when theoretically the social distancing restrictions and I'm curious for your thoughts on the promotional environment on the one hand some of this consumer behavior, probably lingers on the other hand, assuming there's a consumer pantry de load the volumes situation is gonna be tough for from a manufacturer standpoint. So.
Just.
Curious for your perspective on if this lower level of promotion as sticky or not or or if there could be some ramp up as we look to the back half the year and then also in emerging markets with the FX pressure that you mentioned would you anticipate pricing some of that away as you look out or is the consumer buyer, but likely to limit the ability to take.
Pricing in emerging markets. Thanks.
Yeah, Yeah, I think philosophically I think we again I think I mentioned on the call last time, you know we prefer take them a high road, which is built built markets and brands through innovation and advertising and grow the category overall I'm not a huge fan over promoting categories that said you know.
We are seeing a reduction promotions, mostly because demand is running ahead of a of supply and so it doesn't make sense to be promoting when when the shelves are not full at this point. So so we are seeing some pair back I would expect us to be in that kind of environment for the you know door into into the second quarter.
You know I.
I think there will be a recessionary impact obviously I think it will be pretty significant and maybe among the largest that we've seen a in recent history. You know wall consumers I think become more I'm interested in value in those times I'm not necessarily certain that that drives us to a aggressively promoting environment <unk>.
I wasn't here at the time, but I was managing a business or the compete in the food categories and the strategy was not promotion. It was more about explained that consumers about the value of the products and the value the brands and Ah you know that business, we saw our best years during the recession. So I.
I think we're well positioned for the recession, we're not a premium niche player even though premiumization is our core strategy, we're not in niche player in premium we cover most tears and we're happy we do that and we want to serve consumers and meet consumers where their needs are and we're going to do that.
Great that's helpful and any color.
In emerging markets or any more detail there on the strategies in emerging markets from a pricing perspective.
Yeah, I think in some cases, we will price and we have priced already to recover or something or offset some of the FX issues, although in some markets like notably in Latin America, we are seeing more price controls.
Putting in place in the short term given what's been going on with the pandemic so but in general we're a we will be taking price in some markets and we have already done that.
Okay. Thanks, guys.
Thank you.
Thank you next question comes from Nik Modi with RBC capital markets.
[noise] yeah. Thanks, good morning.
Mike I'm just curious how how the current situation has made you maybe possibly we think teacher engines of growth for Kimberly Clark and office against the backdrop of Jeff Mucci, taking over the responsibility and lead the business development team given his background in M&A, so any any thoughts.
I mean, obviously there are lot of different categories that are showing their colors right now in terms of accelerated growth I'll send that would fit probably well what's your portfolio over time, you have a good balance sheet asset prices are likely to get cheaper so any context around that would be helpful.
Yeah, Yeah. We you know we you know we're we're.
But its work Casey 2022 strategy, we love our categories I think there's a lot of potential there both in terms of how we elevate and premiumize our existing markets and also how we develop our markets and expanded categories in our markets over time. So so for those reasons were were remained very excited about the strategy I think it's working.
I think maybe with the current situation with the pandemic or if it does create more opportunity or other opportunities for us to think about how we accelerate that we're going to look at those Ah I can't tell you. There is anything active on that radar right now, but Jeff is very experienced a work as Maria always says every quarter, we're always actively looking at M&A.
Certainly I think our focus would be within our existing categories and if it had a either a technology your product Oh brand that fit in very well or a a geography were brought us into a geography or shrinking the position in the geography or that we would be very excited about it would that the right at the right value and obviously, we're very disciplined.
But we will continue look for those opportunities and just for experienced.
[noise] Murray and then getting they had there yeah.
No no yeah, well said.
And maybe ran it sounds to your Nike do you want to do you want addressing I know, you're not giving guidance, obviously makes sense, but how should we think about pantry de loading because.
Clearly I mean, we thought was going on in March you know people loading up on a lot of your products you know I know people staying home more but it's hard for me to imagine they're using it at the rate at which they were buying it. So how do how should we think about that and I'm just kind of think about how we can think about the.
Consumers actually coming back.
Bakken and buying a normal purchasing cycle you know maybe two months from now too much about how do you guys think about that.
Yeah.
I'll start maybe emirate Maria but the you know there will be a de stock right. So there was consumer consumer pantry stocking it definitely when into homes and not at.
Tail or and I think there's maybe two effects, which is one or you know we and I mentioned this in my my remarks, we still will.
With with consumption running so far ahead as shipments we will be looking to rebuild inventory, where our customers will be looking to rebuild inventory.
In their systems I also think.
In general consumers will want to carry a bit more inventory on their own.
So that's a second effect I'm. So while there will be I think significant destocking I think it will be lumpy and the other reason why be lumpy is I don't think the stocking occurred evenly across our oh, our consumers meaning.
Oh, yeah, it would be very easy to predict if every every household but you know 30% more but you know I seek what's happened is it's a fraction of households that habit and so we will continue I think see some households will be looking to build up inventory or get their hands on more product, while others will be de stocking ins for that reason, it's going to be a little more challenging.
All in and we're still working and sifting through the data there.
Great. Thanks very much.
Thank you. Our next question comes from Olivia Tong with Bank of America.
Great. Thanks, good morning so.
My questions around navigating these huge swings in demand.
You mentioned you didn't see much stock up yet in emerging markets and news just frankly, probably not a lot of room to do that so what are you planning for are you trying to run more capacity right now are they getting more in store like what change happen as you as as the buyer ships, there and secondly I'm.
Just over arching what changes are you making along.
The supply chain Dri production right now while also not over extended yourself and then a reverse for professional legally to keep those facilities productive and how much we purpose.
Thanks.
Yeah, Yeah, Olivia Yeah, I'll tell you our supply chain is executing very well and they've had a very disciplined approach to managing through the.
In my team you know we've had a few sporadic at outages that I mentioned, but really the focus right now is on increasing and driving our utilization on our throughput and in general I think I mentioned in my remarks that you know in a lot of cases were achieving record output. What we've really done is significantly pared back the number of best.
Hey use we're producing just where just producing the look the large volume SK use and that's that's given us more theoretical capacity and we're getting more I'll put out than we ever having a lot of you know and a lot of locations and so right now that is the focus and I will say its right. It's a it's working.
And I think you'll see us catch up to demand.
In the second quarter May progress during the second quarter.
Oh, sorry, I missed probably the other part was around TCP.
Correct.
Yeah, Yeah, Yeah, as we finished the first quarter with that within demand that we saw <unk>.
JCP Casey Pete was also running flat out as well I think you know if at some point given kind of the relative shift a lower demand in professional as we mentioned and also increased demand on the consumer side. The there will be an opportunity for us to shift or some capacity consumer.
Looking into that and and working through that now.
Thanks, that's helpful and then just.
Profit margins as we go forward to marry interest savings realisation advertising advertising, that's the savings important aqsiq salary pretty dramatically and I can line that was related to.
Oh I'm, sorry, certainly can elaborate there. So you think about the go forward how have your expectation to students changed since it does it come in from here it sounds normalize over their incremental actions, you're taking on because it sounds like the pushing some of those projects out so just your view on.
These opportunity going forward and then on advertising.
You mentioned you read the advertising Q1, I assume that's pre coconuts and that comes off and that's taking place in Q4 as well. So just if you could update on your advertising.
Yeah, maybe also made the comment on the advertising and maybe ask Korea to talk a little bit more about the savings, but I know one the headline Olivia is we're going to continue investing our.
<unk> and our capability to grow the business, but we're going to just the for what I would say is the maybe the clearly demand generating a marketing a in the second quarter or parts of the second quarter until we have a better handle on and catch up a little bit to fulfilling the existing demand that's out there. So we feel.
Feel really good about the quality of the innovation.
The quality of our marketing we're excited about the plans we have this year.
But as I mentioned it it doesn't make sense to over promote a category, where there's not a full stock available on the shelf and so for that reason, we're going to focus on ROI is is it doesn't drive a.
Return, we won't pair back but it took to watch right now it's a temporary shift ER and we want to continue invest on the brands.
Korea, great and on the eye on a day or cost savings side on a force I'll start there we had aye good quarter with forced it.
In line with our expectation and we drove a savings across all levers of that program a one of the noticeable and things in the first quarter delivery is on our negotiated material price I savings names are back in line with what they.
They were historically you remember in 2019 days for is lower than normal for for reasons. We've we've talked about I extensively throughout last year. So good savings corner on force at at $100 million that that also compares to way.
A light first quarter, a four savings in the first quarter last year. As you recall is we were working through some might some cost issues in our supply chain in in North America.
When I when I look forward, we should have a good full year outcome with our for savings Oh, though where.
We actually end up on that lever is less of a priority right now than it would be in normal times, given all of the complexities that our supply chain is side is working through a clearly the focus of the teams in our supply chain is producing product and getting that out to market.
To fulfill not consumer into NAND and customer orders and so how all of that plays out for forced for the here. We will we will have to why well have to see a in terms of that restructuring program. We did continue to make good progress on net restructuring program.
Overall, we do.
Expect delays on the implementation of somebody they activity, there, which is related directly to the impacts of that Kobe 19 situation.
Think about that hi, there are a travel restrictions as we all know.
So we we really can't get the people that we need to get to the places that we need to get back on a as you can imagine we've got very experienced engineering teams, both a in house and with third parties that we that we work with and <unk> and right now based people cannot travel and therefore.
Our eyewear experiencing <unk> project delays and the other factor there is a as I mentioned a minute ago. Our supply chain teams are absolutely flat out hi, trying to meet the that's surge in demand for for our products and so all of that's leading to.
Delays on the restructuring.
Hi, we are we are working hard to have those delays I.
Go away, but when they will go away and when we can get back into full swing on there is that those projects in our supply chain. Its currently currently unknown. So how the restructuring savings will play out for 2020.
I can't I cant tell you this point at this point, but.
But that's that's where we are.
Okay.
Thanks Olivia.
Thank you. Our next question comes from Andrea to share with JP Morgan.
Thank you and hope always well I'm. So on follow up on the consumption against shipments internationally. You mentioned some of this far packing in Western Europe, San Francisco tissue, but not much elsewhere. So are you likely just catching up with consumption stock outs in most places and have you seen.
Bill seemed diapers for example yourself.
Korea in April because I'm, assuming there's not much like a stockpiling there 'cause your early Chicopee pack.
And and because they're very developing in Congress, perhaps you know that was still feel as if they were going through the its social deficiency in Oneq call me how much did you grow this quarter.
And how much it represents for you at this point.
And just a couple of clarifications media you expect doors marching to continue to expand as we signed the first quoting for chip index commodities are coming in even better than anticipated.
And the mix will likely shoot from teach the diapers I'm, assuming that's gonna be a bit.
Benefits for what you're marking and.
In some of the other sorry, the two parts of the question that you do but I do people some of the a KCC production of paper into consumer tissue, which is obviously a great competitive advantage at this 0.0 My kids you know production capacity tissue likely increasingly.
You should tip and also the simplification of us can use.
Thank you.
Yeah, maybe maybe I'll start a a pick through I think the consumption effect.
Largely the stock up effect, Andrea was largely or D. any sorry develop market phenomenon, So North America Western Europe.
Australia, New Zealand and Korea to some extent in Korea that you're probed on yeah, I would say less so in personal care. Although I think there was some small affect we definitely saw we're excited to see improved diaper performance from our business ensure growth in our diaper business. So even though I think the category trends remained a down in.
<unk> on infant child care are <unk> diaper business put up very solid growth and then we did see earlier. It was it occurred more in February some stock of behavior and consumer tissue in Korea, as well, so but in general yes significant stock up impact in in across Western Europe, including the UK in North America.
A little bit in Brazil, and then Korea New Zealand.
Australia, New Zealand up with regard to E. Commerce I'll ask Paul for if he has them all up number I don't have the all up number I will tell you.
Commerce shipments and demand dramatically accelerated in the quarter and if you've been reading the news the consumer behavior has shifted to some degree a pretty aggressively because of people not wanting to go out to stores and so we're feeling that in our business and I don't know Paul If you have I don't have the whole the overall number.
So a couple things for Andrei <unk> globally, E. commerce wouldn't be a low double digit percentage of our sales.
It was it was a very strong double digits in the three biggest market so that would be China, South Korea, and the U.S. all of those markets accelerated compared to where they were last year, we actually don't have a a global total just yet given that we're still early in the year, but.
I can confidently say in told <unk> accelerated meaning like.
And I'll go ahead and comment on Chris Martin and I are Grace margin, that's where we're at three nice to have any basis planes hearing year and they were up 120 basis points that sequentially in a in the first quarter and net that drivers around <unk>.
You did the the volume up side, they continued price realization and that we talked about our cost savings and a commodity deflation that we had in in the corridor that was off that to some extent I I like currencies and if I, if I look forward commodity.
These are training data than we we expected coming into the air and we provided the updated outlook on <unk> eucalyptus in preparing comments that currencies are are trending trending worse I'll stay with as we discussed and.
On the the price points, there and our net realize revenue or pricing lab or is is a key lever for us to help offset.
The negative impacts current C.N.N., a typical environment, however, our ability to get price in the near term is is more uncertain than than normal and that uncertainty is around the economic health and the consumer if you. If you think about Latin America in particular.
Healer, that's that's a clear RASK in in this environment, there are potential suicidal and political uneasiness around taking price and increasing our price on some of our products during during these times and and finally.
A lot of currency challenges came from developed markets internationally and in general it's more difficult for us to raise prices in in those those countries. So so how's the effects of those three major factors that affect our our gross margin will.
Play out for the here, we'll we'll have to see.
But it's super helpful. Just on a on the follow up on the capacity account K.C.P. is that something that will increase your t. shirt <unk> by 20% or should we expect that should be.
Two four beside you are asking you rationalization <unk>.
Ah how should we thinking well he's show going forward.
Yeah, maybe all us Paula jumping I I think we're still working through that I mean, we definitely have the opportunity to shifts on capacity I don't know that I could I can pencil and number next to it but Paul I don't I don't know if you've thought about.
Yeah.
If this.
Not as simple as I'm, making decision and then go do if there's a lot that were that will be involved if we do this including different tissue technologies between the two business segments.
So you know I think that for right now the messages, we're we're taking a walk data.
Anvil, if there's an opportunity we're certainly going to go after it had no impact on the first quarter, though.
Thank you I thought you know.
Okay. Thank Andrew.
Thank you are next question comes from Jason English with Goldman Sachs.
Excellent. Thank you for slot and yet and come on every one.
A couple of questions.
First Michael you you mentioned some of the headwinds that you expect to K.C.P. to stay school and forward I guess my question is why what you're doing so well in the first quarter, you know, which it was running flat out what was driving the strength and do we have inventory issues to be because my business right now.
Yeah, I'm not one I I, we did see a stock up effect on on anything bad tissue and so and we're not exactly sure at this point I think it a lot of it went through to end users.
And a lot of it went to a distributors as well, but there there was some some pull through toward as we got toward the late in the quarter <unk>, particularly on watch from products shape and so so strong demand again, we we obviously expect that to to diminish as the as we move in the second quarter.
Okay, and then I totally get the idea of some of this demand spike in stocks are likely to reverse, particularly on personal care, where it's easy to understand that use education.
Yeah, I'm not I'm not I'm not convinced so the consumer tissue side, yet, though can you give me a sense of how many usage occasions typically happen in homes versus out at home. If you know that if you know that statistic.
Well <unk> I don't have that off the top my head, but I I definitely where your line of thinking I agree with which is what consumers are going to be home more and so there's many more occasions for them to interact with our brands. Then then they traditionally would have.
The other thing is it's it's called the K.C.P. to consumers shift isn't apples and oranges shift in the sense of.
The the the the the big horse products tend to be towels and on the consumer side. The big horse tends to be you know back tissue and so so there is a shift affect obviously I think we have a a good position about oh tissue on the consumer side that we like and we're going to be ready to meet the consumers where they need us here.
No totally I guess, it's apples and oranges for you, but not for the industry. It's it's hard to imagine that we aren't seeing actual at home consumer tissue consumption off at least 14% I mean, it's it's <unk>.
Arguably you could you could make argue with it should get 50% and that would be real demand not just stockpiling.
But but in a different but somewhat related question you imagine you're trying to diverse some capacity of K.C.P. towards consumer I imagine some of your other competitors, who are much more deeply tethered to de <unk> and the industrial side are working even harder and faster to do just that are you seeing any evidence of that shift.
And what risk is there that we we get a bit of a clock coming so a lot I think around supply come into the consumer size I Dunno 236 months out however, long it takes to reset some of that stuff.
Again, I I haven't seen any evidence of that thus far.
You know I I think certainly in the short term given given the the supply situation in the market maybe there there has been a little more flexibility.
And some people looking to sell different products in the marketplace for for consumer use but in general I think what Paul was talking about which is our our our shift the capacity is to make Scotland thousand or Scott products or cut no products the right way.
We made that shift and and we're gonna and it'll have every bit they'd be same quality that that are consumers would expect and so that's kind of thought we're we're doing I I'd I haven't seen any evidence of that shift us apart from other suppliers.
But certainly something we're going to keep watching.
Okay. They're good thank you pass it on.
Thank you Jason.
[noise]. Thank you are next question comes from Steve powers with the Deutsche Bank.
[laughter] most statement Mr. Powers, you mean I meet your line to ask your question.
Oh, yeah, sorry about that.
Overdo, well, thanks, Hey, Mike on the on K.C. strategy 2020, I guess my question here is around just how your prioritizing you know investments that encompass that strategy.
Or their capabilities that you think you can still make progress on in this environment or the or maybe take on more urgency versus you know others that need to be deferred or just just seemed a little less critical today versus you know you've a few months ago can just go from color there.
Yeah, I I think yeah, I I think the capabilities are all critical <unk> for for moving forward and their bit then foundational for for a consumer products. Good company, I mean, I and they'll just kind of walking through and and we're kind of using them all right now right innovation, a big one marketing with with a a special emphasis on digital.
The sells execution or in market execution in revenue management and so if you click through all those I think they all have important effects for us. This year innovation. We're <unk>, we're seeing strong traction in China Central and Eastern Europe, North America on our product launches and so we want to continue.
Those obviously digital is kind of how we are competing and it's really the the lion's share of our media investment and so we gotta get better at that continuously I think if you think about this environment, though a lot of it does come down to.
The in market execution, and we're still seems very strong execution locally and that matters more when we're in a tight supply situation. The cord nation. There and then lastly, the the revenue management I think that will be you know I think that's you know important capability and you know, especially given well we might anticipate some recessionary impacts and.
What that might due to create pressure in the in the in the promotion or pricing environment, not and what very glad we had that capability to help us managed to do that in a an effective way.
So yeah, yeah <unk>.
Yeah, I I just add on there that.
You know we came out at the gate strong as you would have expected in a first quarter and and as we discussed R.K.C. 2022 strategies with you back in January we we executed that right out of the gate and you saw that.
Oh come through in the numbers on between the lines spending with with advertising being being uptight meaningfully in the corridor and also investment around the capability areas that that make just described I you know we've already talked about how we see the the advertising.
And <unk> and and trade spend in that environment.
And then on the capability building activities.
I can imagine again with things like travel restrictions are in place some of the the stand on those programs, we'll we'll take a pies here in the in the near term, especially in a in the second quarter, just as a people people can't get too.
Where they they need to be in terms of some of the work that that we were planning planning to do there are so yeah strong at at the gate and the first quarter completely in line with what we talked about and and our Crow strategy around K.C. 2022, you know a.
Pies, given given the restrictions here in the near term.
But as soon as we can turn those activities back on full speed, we remain fully committed to them and we certainly won't do that.
Okay, that's great.
Yes.
Second question, if I could you've talked a little bit about I, just want to really hone in on it it'd be clear about how you're thinking about the expected trajectory of of not price and mix realization through this cycle versus what we've all experienced in the past because it sounds like.
Because of input costs deflation recessionary pressures.
Sounds like you're saying, we might seem more trade down or net price you know give backs promotion and develop markets just wants to get through the the the surge of demand well and well pricing will undoubtedly be so sought after in you know d. markets to offset effects it sounds like you're preparing us.
That we might see less than we might have expected based on past <unk> I, just I don't want them Where's your mouth as I just want to run that backed by you and is that what we is that what I should have heard because that's the one once you have the right now.
Yeah, I think I I, probably I'm in a different place. There you know one I would tell you that the pricing environment right now still remains broadly constructive you know and then the current environment, we have doll back significantly over promotion activity just given the the demand environment I I think.
In General My my preferences to drive category grow through innovation, and an advertising and and and to grow the overall categories.
But you know we will stay stay close to what's happening in the marketplace and we're going to continue to be competitive, but it's not it's it's not where I want to go but I I do think we have the capability to be very effective you know in a recessionary context, and and I think we're we're well positioned in both.
Cases, with with the right brands that offer value to the consumers and when I say that and Steve it's not necessarily price or promotion, driven and a and a lot of it I think will be communication or marketing relating to you know the value that Iran's provide to consumers.
Okay. So so in this in this moment, you're not leaving one way or the other you're just you're just leaving all options on the table being ready for it and and we'll see what happens that's the message.
Yeah, and if I were to lead on again I I prefer in the high road and I'd, rather grow through you know innovation and brands. So.
Okay. That's clear thanks, so much.
Okay. Thank you.
Thank you for next question comes from when they Nicholson with Citigroup.
Hi, My first question has to do with a competitive environment and and thinking.
Strategically for the company I would imagine that not only some of the competitors who supply private label to retailers, but also on the professional side are less well Capitalised. Then you wouldn't Proctor you know or G.P. For example, so I'm I'm wondering as you think about bad again this goes back.
I think just sort of a strategic question you know this could be that opportunity to either expand your professional business sign new contracts on the private label side. How do you think about that as as opportunities. Maybe for you know outsized grows to sort of take advantage of somebody a week or competitors if you well.
Yeah, well I I think you know when he I think maybe the maybe the general theme is certainly there's there's been some significant change in the the overall environment and also the competitive environment and so when we were really want to do was pivot to where the opportunity is for us to feel better needs are and certainly when you're talking about Casey.
Fashion I think I mentioned, the the the opportunity for us to provide help your workplaces. I think is a is a very big opportunity and for for us to compete more effectively I think we are starting to have very good conversations there I think we're starting to see success much more faster success and our tell business. Despite.
A lot of locations being closed for now, but nortel business and it because there are healthier or safer than than jetter dryers and so we are making those type of Moose, you know and we'll work through the other areas. We we also feel like obviously, we're we're stronger we have a strong a balance you'd better capitalised and so there there are some customers who recognized the value of doing.
And so we want to leverage that opportunity as well.
And and do you think that I mean, as you think about what you've seen in the past from an economic perspective, if we are heading into wait longer you know depressed economic environment is private label something I think correct me, if I'm wrong, but it's kind of 5% of your volumes at this point is that something that you would actually be interested in in increasing you kind of want to keep it more focused.
On the brand that's high.
Yeah I think we're we're we're certainly more focused on on the brand inside and as far it's been a relatively small piece of our business and and then you know certainly Wendy right now with given all but we got with our capacity limitations in the near term, we're really focus on on filling all the brand demand that we got right now.
And then last question just from feminine hygiene in the U.S. on your market share are so much better across so many different categories, but feminine hygiene is from one area at least in Nielsen data. So I recognize that might might not you know tell the whole story, but that's that's the one area both on the pad and the Tampa outside where do you continue to lose a little bit of share.
Do you think that his prey thing is that branding is an innovation what what's the and again it may not be if we had you know all outlet date or whatever that might not be inaccurate reflection <unk>, what's going on in that business.
Yeah, Yeah when in Femcare in North America was up about high single digits on volume, but we were down about a point on share. So I think you're you're you're you're you're right would on what you're pushing on we have a great global brand positioning with our she can't global Grand idea and I think that's been working for us globally.
I think we we do have a team that is working to improve that execution North America and also bring the right innovations of the Mark and so you know, we we love the brand positioning, but we got to do a better job of executing that North America and the teams all over it.
Data thanks that much.
Thank you.
Thank you are next question comes from Kevin Grundy with Jeffrey's.
Thanks to morning, everyone and I Hope you and your families are staying safe and healthy two unrelated questions first one Mike on the diaper business and the impact on on birth rates from the recession in the U.S. So when we look back we saw a birth rates had begun to improve heading heading into the global funding.
Actual crisis, and then we saw birth rates dip into the recession and they continue their decline. So I was curious as part of your planning process here, what your updated thoughts would be on the potential implications on birth rates from from the recession and how that May. It's one of your view for the category looking out there not just over the next 12 months, but maybe over the next.
Three to five years, and then unrelated on on E. Commerce I would say you know there's little debate that the adoption shift there has only accelerated given the nature of this recession. So I think it'd be helpful to to get updated use on the company's market share positions in your biggest categories versus traditional retail your margins and E. commerce versus.
Traditional retail and then maybe some comments on your position relative to private label and that'll do it for me. Thank you for all that.
Yeah with regard to diapers I think we did see some improvement in the birth rate in North America over the past year or so now just recognize Kevin we lag of years. So I think it had been down for the previous for years down about on Twoish per cent and I think maybe the most recent year. We we we our expectation was it for it to be down about.
Point.
And the category I think through the back half the last year and through the first couple of months or this year really was rebounding quite well and I would say up you know almost mid single digits were technically mid single digits. So I think it was a nice rebound the category.
Purposely the stock up effect really kind of effect of that and and got enough to double digits in the latest quarter for the full quarter Ah, but you know we are very excited about our diaper business globally and in particular in North America. We've got great products, We've got a significant product improvement coming and and hugging smoking's right and we've got great.
<unk> across premium <unk>, a momentum in our premium business and so you know again I think typing Jason's point, you know I wouldn't expect the pandemic and to to grow category consumption in diapers or there was pronounced stock about that.
But I do think you know we are seeing an improvement or expect to see some improvements in the birth rate.
On E. Commerce, you know right now given the supply situation I think again as Paul mentioned very very strong double digit growth that we had in the quarter.
Really the the the the the the focus right now is getting the supply out there and we are allocating brought as the customers and making sure that we get the right products out to our customers and so really maybe the the focus in the near terms about getting supply ramped up and out there and increase their capacity so.
And then I forgot the third third question.
Or was it was all E. commerce related might use it was not so much what's going on now realizes the pantry logo non so the so the sail through looks phenomenal selling it of course is very good as well, it's really it's your market share positioning online.
Additional retail and your margins for online relative nutritional retail even private label relative to traditional retail.
Yeah, <unk> break that down or three principle markets you know so obviously, our our our biggest e. commerce markets are in the U.S., China and Korea, you know it you know in a in China, well over 50% or businesses and E. Commerce, we have a very strong e. commerce position there are similar.
In Korea, almost 90% of the diaper businesses on E. Commerce, and obviously, we're far away the market share leader in Korea, and then the U.S. I would say Oh cross or categories. Overall, we're we're about fair share. Although however, we're probably a little head on <unk> on consumer tissue and a little bit later on diapers, but we've been making.
Progress there in fact, if we had a multiple share point increase last year on our on line diaper share. So so we're making progress with regard to margins are generally the way we price out particular in North America, or we press our customers drama on a similar programs some margins at the at the highest level tend to be about the same.
There are going to be some differences because we do reflect advertising investment in back to the customer because they are customer and so there will be some differences and it may appear that the margins, maybe slightly lower but that really reflects what we're doing let's say with you know Amazon media or Walmart media those kinds of things.
The answer to thank you very much.
Yeah, that's fine thank you very much.
Thanksgiving.
Thank you are next question comes from Steve Strycula with U.B.S.
Hi, good morning.
So when you go back to the brick countries and really focusing on the volume piece rather than the price makes peace, particularly want to to understand.
Kobe situation more just from a recessionary situation sounds like a piece, there's two pieces apart love to understand first what are you seen the bread countries in terms of consumers ability to access your products because some of those markets maybe the retail stores aren't open how do you think about near term demand being able to secure that and then.
On the <unk> and then on the Recessionary Peace do you think that Volumetrically. Some of these countries like in Latin America, China, and India that the business can not just grows drove recessionary period based on what we know from the wait no nine and then have to follow.
Yeah with regard to brick maybe I'll have to talk through the different pieces, just because we don't want them together, but I think the with regard to China I would say the the business for US it's been largely back on you know online.
Both figuratively and literally a and since we tend to have a big portion of our business sold on line I I think sales have I would say resume if not normal levels are closer to normal levels and we feel very good about then I think our team feels very bullish about how that market is performing and and where the consumer.
Burns headed there.
Brazil, So early to tell because I think the the impact of the we've been experiencing the recession or impact in Brazil for Awhile now and then the the pandemic is a more recent phenomenon there were a little there's a little bit lag of it affecting it there, but it's starting to have an impact and that's why we did see some of the stock up behavior.
I I do think you know we are seeing you know continued strong demand in tissue, it's a little tough to see.
What was the stock up effect versus what was the normal pull through effect, but it was definitely elevated and then on the personal care side, we didn't see demands soften a little bit and again, we had been seeing that occur in the category over the last several quarters just based on the economic impacts.
<unk> brick India right now we were strong double digit growth and could you now it's run double digit growth, but the the more recent emphasis with Kobe 19, now is making making sure that we can maintain operational supply and that's been a big focus we were down for a period of time.
While we were getting the right permits to operate as an essential business. So we you know we're back on line now fully but as you know and or or maybe read that you know I think the coded or very concerned about the the the repercussions in the marketplace on the effect that is going to have on consumers and so we're staying close to that that said, we we experienced.
Double digit growth in the quarter there.
And then Russia.
Or central and eastern Europe for US overall continues to perform very strongly was up high teams overall strong share growth in diapers and Femcare in Russia last quarter multiple share points in both [noise] turns out I was in Ukraine and news back to stand in Russia right before.
We went on work from home or the markets are performing grade Ukraine. We've achieved share leadership I think we're about to <unk> 40 share at this point nearly a 60 share a in a in Kazakhstan and we feel very good about the marks I I don't know that I have a clear view.
Maybe the pandemic effect, yet because I think that's still working its way through it and but we're watching that very closely.
Things like that was really helpful and they have one quick follow up and I'll pass it along.
On the innovation slate for this year, how does that endemic really impact that.
Just certain products. They may have been slotted or your March for March and April <unk> make it onto a retail shelves for G., maybe pieces of innovation slate get you know put into that back to school reset just help us understand what's what are you really excited about in the pipeline. Thank you.
Yeah, I mean, I as I mentioned that we've got a lot of innovation coming on diapers. This year with both in North Americans not been dry our premium products are fantastic China. We're we're launching we already we feel like we already have the best diaper in the marketplace and we're launching a significant upgrade to that this month that the team is very excited about we've got a significant innovation.
Coming in in Latin America, well, especially Brazil on diapers. So that's diapers I'll come back to it you know femcare, we we have pad improvements and mark great marketing plans around the world and also in our don't care business. So so we have a lot of good innovation that I mentioned earlier I think the in terms.
The phasing in general, especially in personal care. It is it is going as per plan with a couple exceptions, which is in in Latin America, because what Maria mentioned, we've delayed we don't have the ability to get engineers internationally into locations to install new equipment and so some of the.
Somebody innovation that we had slated for launching that we're going to launch in Brazil. We were also launching into the markets, where the laying that just for Executional reasons until we have access to the mills and we don't because we're prioritizing saved your for employees. We don't want people, who are not traditionally going into the mill going into the middle and creating a different.
Hum drum environment right. So so it's not just for travel restrictions, but it's for safety restrictions also that's where consciously making some of those trade offs and and so yeah M- net net we will delay some innovations, but it's more for executional reasons.
Understood. Thank you.
Yep. Thank you.
Thank you are next question comes from Lauren Lieberman with Barclays.
Oh, Thanks, I'm I'm off that they will <unk>. Thank you collect.
Alright, thanks for.
Thank you have this time, we have no other questions in the queue.
Alright, well, we appreciate every once time in questions today and will wrap up a with a comment from Mike.
You know thank you all for for joining our call were really encouraged by our solid start to the year in our ability to managed through these challenging conditions and while they're challenging you know, we're obviously realistic about or near term challenge, but we remain very optimistic.
In our long term potential so thank you for a for joining us today.
Thank you very much.
Thank you ladies and gentleman that includes today's presentation. You made disconnect your phone lines and thank you for joining us this morning.
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