Q4 2023 Kimberly Clark Corp Earnings Call

January 24, 2024

Good morning, and welcome to Kimberly Clark's fourth quarter 2023 earnings question and answer session.

I'll now hand, the call over to Christian <unk>, Vice President Investor Relations. Please go ahead.

Thank you and Hello, everyone. This is Chris Jakubik head of Investor Relations at Kimberly Clark and welcome to our Q&A session for our fourth quarter and full year 2023.

Results.

Chris Jakubik: During our remarks today, we will make some forward looking statements that are based on how we see things today actual results may differ due to risks and uncertainties and these are discussed in our earnings release and our filings with the SEC.

Chris Jakubik: We'll also discuss some non-GAAP financial measures today. These non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results. You can find the GAAP to non-GAAP reconciliations within our earnings release and supplemental materials posted at Investor Doc Kimberly Clark Dot com.

Speaker Change: Before we begin I'm going to hand, it over to our chairman and CEO, Mike <unk> for a few quick opening costs.

Mike: Okay. Thank you, Chris and first of all I'd like to just welcome Chris to Kimberly Clark is his first earnings call with us but.

Mike: It's probably a triple digit number in earnings calls that he's done in his career. So welcome welcome to Casey, Chris Hey, I'd like to just start by sharing that we're really proud of our performance in 2023, but of course, we're not yet satisfied we've built a strong foundation and position Kimberly Clark for our next chapter of growth.

Mike: These past few years, we've consistently invested to build a consumer centric organization, while navigating unprecedented challenges.

Mike: Our strategy to elevate our categories and expand our market is working and we're on an exciting path and positioned to deliver durable growth and returns for shareholders in our next chapter and.

Mike: And as I as we mentioned in our prepared remarks, we're looking forward to detailing our strategic priorities, our long term algorithm and outline the key initiatives behind our plans in March and so with that love to open it up for questions.

Mike: Yeah.

Speaker Change: Certainly everyone. At this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.

Speaker Change: We do ask that while posing your question. Please pickup your handset if you're listening on speaker phone to provide optimal sound quality.

Speaker Change: We do ask that participants please ask one question and one follow up.

Speaker Change: If you have any additional questions. Please reenter the queue.

Speaker Change: Once again, if you have any questions or comments. Please press star one on your phone.

Speaker Change: Your first question is coming from Dara <unk> from Morgan Stanley. Your line is live.

Speaker Change: Hey, guys.

Dara: I just wanted to touch on the organic sales growth guidance for next year low to mid single digit seems pretty robust relative to the 3% this quarter and just starting out the year lower than Q1, obviously you mentioned the 200 basis points from the Hyperinflationary markets next year in the prepared remarks, so that's part of it.

Dara: It maybe a give us a sense of how much those markets contributed in Q4, and then just as you look at the base business ex those markets, maybe some commentary on pricing versus volume and what you're expecting and if you could also just touch on market share performance in Q4, the U S track channels, a week or so.

Dara: Just any update on how you're feeling about your market share performance and plans on that front as you look out to 'twenty four would be helpful.

Speaker Change: Maybe I'll start with <unk>.

Speaker Change: Maybe as you as you kind of tee up there the state of the consumer, particularly in developed markets I'd say, our underlying category growth.

Speaker Change: Across personal care consumer tissue and professional remains pretty robust both in absolute terms and I think if you look across and relative to other broader staples our.

Speaker Change: Our products I'll remind you our daily essentials and unlike some categories substitution of our categories is fairly low on top of that we still have a lot of room for penetration and.

Speaker Change: And revenue per user gains and so we're working on that so so overall I think the consumer right now still remains despite.

Speaker Change: You might argue is a fairly mixed kind of consumer picture the consumer remains pretty healthy we're confident in our ability to elevate our categories and expand the market further.

Good morning, and welcome to Kimberly Clark's fourth quarter 2023 earnings question and answer session. I'll now hand the call over to Chris Jakubik, Vice President, Investor Relations. Please go ahead.

Speaker Change: The consumer picture I said somewhat mixed employment remains strong wage growth is up.

Chris Jakubik: Thank you. And hello, everyone. This is Christopher Kubrick, Head of Investor Relations at Kimberly Clark. And welcome to our Q&A session for our fourth quarter and full year 2020. Thank you for your time.

Speaker Change: But I think it's also probably fair to say from our side that the full effects of all the rate hikes and all of the economic policy impacts are not fully materialized in the consumer so that all said the categories were pretty robust in North America, just to give you a reference point.

Christopher Kubrick: Thank you. During our remarks today, we will make some forward-looking statements that are based on how we see things today. However, actual results may differ due to risks and uncertainties, and these are discussed in our earnings release and our filings with the SEC. We will also discuss some non-GAAP financial... Non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results.

Speaker Change: North America category value was up six in the fourth quarter and eight up eight for the year. So that's a pretty solid number again I'll chalk that up to the fact that there's low substitution of our categories and that makes our categories a lot more resilient than other staples categories that I've worked in the past.

Christopher Kubrick: And you can find the GAAP to Non-GAAP reconciliations within our earnings release and the supplemental materials posted at investor.kimberlyclark.com. Before we begin, I'm going to hand it over to our chairman and CEO, Mike Hsu, for a few quick opening comments. Okay, thank you, Chris. And first of all, I'd like to just welcome Chris to Kimberly Clark; this is his first earnings call with us, but probably the triple digit number of earnings calls that he's done in his career. So welcome. Welcome to KC, Chris.

Speaker Change: We also see pretty good demand for <unk>.

Speaker Change: Premium products and we're seeing that in a broad array of markets, including in North America surprisingly you might say in a market like Argentina still Brazil, China of course, and so so we're very enthused about our approach with elevate elevate our categories and expanding our markets and we believe thats still working and still appropriate.

Michael D. Hsu: Hey, I'd like to just start by sharing that we're really proud of our performance in 2023. But, of course, we're not yet satisfied. We've built a strong foundation and positioned Kimberly-Clark for our next chapter of growth. These past few years, we've consistently invested in building a consumer-centric organization while navigating unprecedented challenges. Our strategy to elevate our categories and expand our markets is working, and we're on an exciting path and positioned to deliver durable growth and returns for shareholders in our next chapter. And, as we mentioned in our prepared remarks, we're looking forward to detailing our strategic priorities, our long-term algorithm, and outlining the key initiatives behind our plans in March. And so with that, I would love to open it up for questions. Certainly. Everyone will be conducting a question and answer session at this time. If you have any questions or comments, please press star 1 on your phone at this time.

Speaker Change: Even though we recognize we've got to be able to offer great value in all price tiers.

Speaker Change: So I'll pause there I know I threw a lot at you. So I know there are multiple parts of your question I don't know if you wanted to.

Speaker Change: Nelson as you're aware there was a question on the decomposition of our topline growth for the year and how it relates to Q4, let me address that a little bit of Dara.

Speaker Change: To recap the fourth quarter was a quarter in which we attained.

Speaker Change: Flat volumes and pricing was only 2% of the contribution with mix being one that 2% was largely hyperinflationary economies and as you think about this year. This is going to be a year in which we see volumes beginning to pick up from Q2 on.

Speaker Change: And we expect pricing to be in that 200 basis point range right in line with what we saw in the last quarter of the year and that pricing is really going to be driven based on what we expect today by hyperinflationary economies. So the profile is really on the pricing side very similar to what we saw in <unk>.

Michael D. Hsu: We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. We do ask that participants please ask one question and one follow-up. If you have any additional questions, please re-enter the queue. Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Dara Mohsenian from Morgan Stanley. Your line is live.

Speaker Change: Q4.

Speaker Change: Okay, and the volume pick up as we go through the year or is that more.

Speaker Change: Pricing moderates is it that you've seen some early signs of whatever the geographies or product categories are that that youre seeing some volume recovery or is it more just sort of a natural assumption over time as pricing recovers.

Dara Mohsenian: Hey guys, I just wanted to touch on the organic sales growth guidance for next year. Low to mid-single digits seems pretty robust relative to the 3% this quarter and just starting out the year lower in Q1. Obviously, you mentioned the 200 basis points from the hyperinflationary markets next year in the prepared remarks, so that's part of it. Maybe A, give us a sense of how much those markets contributed in Q4. And then, just as you look at the base business X, those markets, maybe some commentary on pricing versus volume and what you're expecting. And if you could also just touch on market share performance in Q4. The U.S. track channels are weaker, so just any update on how you're feeling about your market share performance and plans on that front as you look out to 24 would be helpful.

Speaker Change: We're pretty pleased Dara I think we've made very very solid progress on volume and consumers responded very favorably on our categories.

Speaker Change: So I'd say first of all our next chapter, which I think we're turning the page and.

Speaker Change: Shifting to a volume mix driven plan.

Speaker Change: Just returning to that.

Speaker Change: Was kind of our approach pre pandemic and so we're going back to that so contribution from pricing to help offset the record inflation that we've got is going to recede and has already started receding.

Speaker Change: There might be a need to address some particular higher costs in some markets or locations.

Speaker Change: But that's going to be pretty surgical.

Speaker Change: Thanks. Okay. Thanks, Tara. Maybe I'll start with, perhaps as you kind of tee up there, the state of the consumer, particularly in developed markets. I'd say our underlying category growth across personal care, consumer tissue, and professional remains pretty robust, both in absolute terms and, I think, if you look across in relative to other broader states. Our products, I'll remind you, are daily essentials, and unlike some categories, substitution of our categories is fairly low.

Speaker Change: And.

Speaker Change: Will likely reflect if theres pricing reflect inflation at local levels, but overall I think we're feeling very good about driving the volume on our business, we have seen our businesses start to start to improve.

Speaker Change: Including the North America on a share perspective in the fourth quarter and believe we have the right mix and growth drivers in our plan to drive the business going forward.

Speaker Change: Thanks, guys Okay.

Speaker Change: On top of that, you know, we still have a lot of room for penetration and revenue per user gains, and so we're working on that. So overall, I think the consumer right now still remains, despite, you know, what you might argue is a fairly mixed kind of consumer picture, pretty healthy. You know, we're confident in our ability to elevate our categories and expand the markets further. But the consumer picture, as I said, is somewhat mixed. You know, employment remains strong, wage growth is up, you know, but I think it's also probably fair to say from our side that, you know, the full effects of all the rate hikes and all the economic policy impacts are not fully materializing in the consumer. So that all said, the categories were pretty robust. In North America, just to give you a reference point.

Speaker Change: Okay. Thank you Dara.

Speaker Change: Thank you. Your next question is coming from Lauren Lieberman from Barclays. Your line is live.

Lauren R. Lieberman: Thanks, Good morning, Hi, I wanted to just with shift focus maybe a little bit to talk a bit about the cost picture and for savings and both of those the benefit from deflation and for savings in the fourth quarter were a bit lighter I think than than expected certainly than we'd modeled.

It's rare to see that so if you could just maybe provide some perspective on why and the outlook moving forward and maybe how FX plays into that if at all.

Speaker Change: Sure. So let me start Lauren by saying that this face of cost recovery and supply chain stabilization.

Speaker Change: Think of it as largely behind us.

Speaker Change: The North America category value was up six in the fourth quarter and up eight for the year. So that's a pretty solid number. Again, I'll chalk that up to the fact that there's low substitution in our categories, and that makes our categories a lot more resilient than other staples categories that I've worked in in the past. We still also see pretty good demand for premium products, and we see that in a broad array of markets, including North America. Surprisingly, you might say in a market like Argentina, Brazil, China, of course, and so we're very enthused about our approach to elevating our categories and expanding our markets, and we believe that's still working and still appropriate, even though we recognize we've got to be able to offer great value at all prices. So, I'll pause there. I know that I threw a lot at you, so I know there were multiple parts to your question. I don't know, Dara, if you wanted to...

Speaker Change: Lot of the disruptions and the Super cycle that we saw our expectation is for that to not happen in the foreseeable future and certainly in 2024 based on what we know today.

Speaker Change: So thinking about costs as a whole first our aggregate cost basket is easing and inflation, but theres no deflation because there are several components that I'd like to.

Speaker Change: To unpack.

Speaker Change: We expect the 24 cost environment to be more stable.

But we will still remain at higher levels of costs, mostly in line with what we've seen in this super cycle. These past three years.

Speaker Change: As you know core commodities like bulk resin energy in dollar terms are expected to be somewhat favorable following the trends that we saw in the back half of last year.

Speaker Change: However, if you think of other components of our cost basket like distribution logistics and labor inflation, that's actually going to remain a headwind.

Speaker Change: In this year in 'twenty, four and that's pretty much offsetting the tailwind that we're seeing on the core commodities, which leaves us with currency related inflation on imported materials largely impacting <unk>.

Speaker Change: Our emerging market Hyperinflationary markets, which will need to be addressed and we have been addressing that over the past years and we intend to do that in the course of the year.

Speaker Change: There was a question about the decomposition of our top-line growth for the year and how it relates to Q4. Let me address that a little bit, Adara. I think to recap, the fourth quarter was a quarter in which we attained, you know, flat volumes, and pricing was only 2% of the contribution, with mix being 1. That 2% was largely a hyperinflationary economy. And as you think about this year, this is going to be a year in which volumes begin to pick up from Q2 onwards, and we expect pricing to be in that 200 basis point range, right in line with what we saw in the last quarter of the year. And that pricing is really going to be driven, based on what we expect today, by hyperinflationary economies.

Speaker Change: As a perspective the overall net cost headwind. When you include all of the components is projected to be around 100 basis points for the year, which we see is much more manageable than we've seen in the past we've got very strong productivity plans.

Speaker Change: And then a little need to price outside of local inflation in these hyper inflationary markets.

Speaker Change: Turning to force our productivity targets.

Speaker Change: The outlook we provided.

Speaker Change: No.

Shows that we feel very good about our ability to continue generating strong productivity.

Speaker Change: We ended last year with force results of around $325 million.

Speaker Change: And it's important to highlight that over the last 20 years <unk> has delivered a little north of $6 billion of cumulative identified productivity that is flowing through the P&L.

Speaker Change: So the profile is really, on the pricing side, very similar to what we saw in Greece. Okay, and the volume pickup as we go through the year, is that more because pricing moderates? Is it that you've seen some early signs, and whatever the geographies or product categories are, that you're seeing some volume recovery? Or is it more just sort of a natural assumption over time as pricing recovers?

Speaker Change: More recently and we've been talking about it.

Speaker Change: Even at your conference in September we are evolving our culture towards an end to end integrated cost management perspective really focused on gross productivity.

Speaker Change: We're building a proactive multiyear pipeline of initiatives, we see our pipeline of gross productivity out to 36 months pretty strong and that should flow to the bottom line and this is reflected in the outlook. We're providing today I'm excited to talk more about our transition to gross productivity and integrated margin management at our March meeting.

Speaker Change: We're pretty pleased, Dara. I think we've made very, very solid progress on volume, and consumers have responded very favorably to our categories. So I'd say, first of all, our next chapter, which I think we're turning the page and shifting to a volume-mix driven plan, which is returning to that, which was kind of our approach pre-pandemic. And so we're going back to that. So contribution pricing to help offset the record inflation that we've got is going to recede and has already started receding. You know, there might be a need to address some particular higher costs in some markets or locations. But that's going to be pretty surgical and will likely reflect inflation, if there's pricing, at local levels.

Speaker Change: When we when we talk about the future a little more.

Speaker Change: Okay great.

Speaker Change: Then if I could just also follow up a bit on Argentina. So I guess a couple part question path forward for Argentina, whether the devaluation of monetary assets is onetime in nature or do we need to build this in.

Speaker Change: How do we think about that in the next quarter or two of the year and then.

Speaker Change: That's the case again this year so path forward in Argentina.

Speaker Change: But overall, I think we're feeling very good about driving the volume of our business. We have seen our businesses start to improve, including North America on a shared perspective in the fourth quarter, and believe we have the right mix and growth drivers in our plan to drive this forward. Thanks, guys.

Speaker Change: Valuation of monetary assets piece, and then all of the overall risk management on currency and transaction.

Speaker Change: Hey, Lloyd Thanks for the question.

Speaker Change: Hey, let me start with the overall on the path forward I will say, hey, we're staying the course, but work of course going to balance.

Speaker Change: Potential against the inherent volatility in the business and so we're going to remain prudent.

Speaker Change: Thank you. Your next question is coming from Lauren Lieberman from Barclays. Your line is live. Great, thanks. Good morning.

Speaker Change: I do want to say I'm really inspired and we've got people operating in some difficult conditions in Argentina and also other markets. So you know as a company, we're really inspired by the impact our employees make in these markets.

Lauren R. Lieberman: Hi, I wanted to just shift focus maybe a little bit to talk a bit about the cost picture and forced savings. Both of those, the benefit from deflation and forced savings in the fourth quarter were a bit lighter, I think, than expected, or certainly than we'd modeled. So it's rare to see that.

Speaker Change: And really proud to shoulder that responsibility and serving our consumers in these difficult conditions at the same time I will say, we will not just hanging around where conditions become untenable and then of course, you would double play can say whats untenable I'll, let you know when we see it but certainly.

Lauren R. Lieberman: So if you could just maybe provide some perspective on why and the outlook moving forward and maybe how FX plays into that, if at all. Sure, so let me start, Lauren, by saying that, you know, this phase of cost recovery and supply chain stabilization would think of it as largely behind us. A lot of the disruptions and this super cycle that we saw, our expectation is for that to not happen in the foreseeable future and certainly in 2024 based on what we know. So, thinking about cost as a whole, first, our aggregate cost basket is easing in inflation, but there's no deflation, because there are several components that I'd like to unpack.

Speaker Change: If we can make product or if we can't convert currency at some point that becomes somewhat untenable, but right now we're working our way through it in multiple markets like Argentina like Ukraine.

Speaker Change: And so again thats.

Speaker Change: The high level answer our path forward is we're staying the course.

Speaker Change: Yes, and Laurent to build on.

Speaker Change: I told around the pricing and Hyperinflationary. So a few things as we think of last year. The full year impact of the mark to market of our net monetary position in other income and expense line.

Speaker Change: Okay. Thank you Glenn.

Glenn: Okay. So the impact above the operating profit line was $115 million for the year and about $70 million for the quarter.

Lauren R. Lieberman: We expect the 24-cost environment to be more stable, but we will still remain at higher levels of costs, mostly in line with what we've seen in this super cycle these past three years. As you know, core commodities like pulp, resin, and energy, in dollar terms, are expected to be somewhat favorable following the trends that we saw in the back half of last year. However, if you think of other components of our cost basket, like distribution, logistics, and labor inflation, that's actually going to remain a headwind this year and in 2024. And that's pretty much offsetting the tailwinds that we're seeing on the core commodities, which leaves us with currency-related inflation on imported materials, largely impacted by emerging market hyperinflationary markets, which will need to be addressed.

Glenn: That netted off some of the interest income that we perceive on cash balances in Argentina led to a net impact of about 16 on EPS in the year and about <unk> of EPS in the quarter.

Glenn: As we fast forward to this year.

Speaker Change: We are.

Speaker Change: Projecting about half of that impact both in the other income and expense line and then on EPS we were.

Speaker Change: We'll see a little bit off.

Speaker Change: More of that impact in the first half of the year, it's reflected in part of our outlook, but that's what projected at this stage based on what we know.

Speaker Change: Okay, great. Thanks, so much okay. Thanks, Laura.

Speaker Change: Thank you. Your next question is coming from Jason English from Goldman Sachs. Your line is live.

Jason English: Hey, good morning folks Thanks for Slotting me in Hey, Jay.

Lauren R. Lieberman: And we've been addressing that over the past years, and we intend to continue to do so in the course of the year. Just as a perspective, the overall net cost headwind, when you include all of the components, is projected to be around 100 basis points for the year, which we see as much more manageable than what we've seen in the past. We've got very strong productivity plans, and little meets the price outside of local inflation in these hyperinflationary markets.

Jay: Hey, Mike a couple of questions I want to bring it back to volume.

Jay: Specifically I wanted to double click on your professional segment, where volume was a little bit weaker than we expected this quarter, if I zoom out and just look since 2019, so pre COVID-19 volumes down like 23, 24%.

Jay: And I know you mentioned right sizing and prepare remarks today. So my question is whats going on there where has all the volume gone.

Jay: And how are you.

Jay: Margins suggest youre not getting meaningful deleverage how have you been able to offset the associated deleverage effects of that loss volume.

Lauren R. Lieberman: Turning to force and our productivity target, the outlook we've provided, you know, provides, shows that we feel very good about our ability to continue generating strong productivity. You saw that we ended last year with FORS results of around $325 million. And it's important to highlight that over the last 20 years, FORS has delivered a little north of $6 billion of cumulative identified productivity that has flowed to VNL.

Speaker Change: As always Jason and Youre right on the issue so but good one but I think if you look at the margin profile of the business I think the team has done a great job addressing I would say the volume softness or volume change in the environment and a couple of different things. One we had to adjust rapidly to this work from home demand environment there.

Speaker Change: <unk> came on with the with the advent of Covid as you might recall and.

Speaker Change: You may recall, our washroom business, which is the majority of our business and KC professional.

Speaker Change: Tends to be higher higher development and offices and so.

Lauren R. Lieberman: More recently, and we've been talking about it even at your conference in September, we have been evolving our culture towards an end-to-end integrated cost management perspective, really focused on gross productivity. We're building a proactive multi-year pipeline of initiatives. We see our pipeline of gross productivity out to 36 months pretty strong, and that should flow to the bottom line. And this is reflected in the outlook we're providing. I'm excited to talk more about, you know, our transition to gross productivity and integrated margin management at our March meeting when we when we talk about, Okay, great. And then, if I could just also follow up a bit on Argentina.

Speaker Change: It's really where the volume has gone I would say right now that that volume.

Speaker Change: On a category basis is running about 80% to 85% of what it was pre pandemic and it's not going to bounce back quickly throughout the router.

Speaker Change: I'm not sure I'm not sure you are in your office at Goldman in New York every day and so so that's the same thing as we look around our offices, we're not fully back yet right and so it's partial at best So that's I would say an ongoing challenge in that business, but I think our team has adjusted to that and treated as a reality.

Speaker Change: We have right sized some of the business and some of it was from a cost perspective.

Speaker Change: The reality is we were doing a lot of volume and co packing a lot of volume on the external market and so I'd say, we haven't had to address fixed costs as much as you might have might have thought of and so and I think thats reflected so I think the team has done a good job of recapturing margins from a both from a price perspective.

Speaker Change: So, I guess a couple parts of this question, the path forward for Argentina, whether the devaluation of the monetary assets is one-time in nature, or do we need to build this in, or how do we think about that in the next quarter or two of the year? And then, also, overall, just kind of risk management around FX because this time last year, there was also kind of a bit of a surprise to the street in terms of the expected impact from transactional FX. So, and that's the case again this year. So, the path forward in Argentina, the devaluation of monetary assets piece, and then all this overall risk management on currency and transactions. Okay. Hey Lauren, thanks for the question.

Speaker Change: Mix perspective.

Speaker Change: And also while growing volumes at the same time behind great innovations like our icon dispenser, which I believe is really the best dispenser.

Speaker Change: Side of the business.

Speaker Change: So anyways, so I think the team's done a great job and I think you can see that in the margin and definitely have recovered from 2019 margins on that business and actually exceeding at this point.

Speaker Change: That's helpful. I appreciate that.

Speaker Change: And I think another headwind to volume this year that you were talking about early in the year, but not talking about so much of late where supply constraints.

Speaker Change: So can you remind us where they were or how sizable they were I assumed a lack of conversation around them suggest there you've alleviated now, but can you confirm that and I would I would imagine that cycling those supply constraints should prove to be a tailwind, particularly in the first half of next year is that right and how large of a tailwind.

Speaker Change: Hey, let me start with the overall path forward. I will say, Hey, we're staying the course, but we're, of course, going to balance potential against the inherent volatility in the business. And so, we're going to remain prudent.

Speaker Change: One could only hope Jason we could only but actually I think first of all a couple of things. Yes. We did have some pretty significant supply constraints in our north American consumer business for the majority of last year definitely through Q3 and that had to deal with some supply conditions with external suppliers envelope for example on packaging.

Lauren R. Lieberman: I do want to say I'm really inspired, and we've got people operating in some difficult conditions in Argentina and also other markets. So, as a company, we're really inspired by the impact our employees make in these markets and really proud to shoulder that responsibility of serving our consumers in these difficult conditions. At the same time, I will say we will not just hang around where conditions become untenable. And then, of course, you would double-click and say, "What's untenable?"

Speaker Change: That made availability difficult across personal care also some in our <unk> business I think we've talked about a key ingredient that we weren't able to get access to that we developed a secondary source through during the course of the year. So those are the kind of the big factors I.

Speaker Change: I would say I think we mentioned that on the last quarter call.

Speaker Change: Didn't make the biggest deal about it we were working through this challenge with our suppliers with our customers and they are fully aware of it but it's not something that we communicated publicly.

Speaker Change: But I would say for the better part of the year that did suppress our share performance.

Not saying that was the only driver, but I think it was a fairly significant driver we have addressed those issues.

Lauren R. Lieberman: I'll let you know when we see it. But certainly, if we can't make product or if we can't convert currency, at some point, that becomes somewhat untenable. But right now, we're working our way through it in multiple markets, like Argentina, like Ukraine. And so, again, that's the high-level answer on the path forward: we're staying the course. Yeah, and Lauren, to build on, you know, what I told Dara about pricing and hyperinflation. So a few things. As we think of last year, the full-year impact of the market on our net monetary position in other income and expense lines... Sorry, keep going.

Speaker Change: Our commercial execution is going to be stronger than ever really passed all these constraints that I talked about.

Speaker Change: And our consumption is moving in the right direction. Our share has moved in the right direction in the fourth quarter as well in North America.

Speaker Change: Got it good stuff. Thanks, a lot I'll pass it on and look forward to see you in March Okay. Thanks, guys.

Speaker Change: Thank you. Your next question is coming from Anna <unk> from Bank of America. Your line is live.

Anna: Hi, Good morning, and thank you for the question I wanted to follow up on market share in light of your exposure to private label than.

Speaker Change: Okay, so the impact above the operating profit line was $115 million for the year and about $70 million for the. That netted off some of the interest income that we perceive on cash balances in Argentina led to a net impact of about $0.16 on EPS for the year and about $0.09 for the. As we fast forward to this year, we are. Projecting about half of that impact, both in the other income and expense line and then on EPS, we will see a little bit of, more of that impact in the first half of the year. It's reflected in part in our outlook, but that's what's projected at this stage based on what we think. Okay, great. Thanks so much.

Speaker Change: And your chat channels private label share anything creeping up in some of your categories. Just wondering how are you thinking about brand and beckman with marketing or promotion in order to maintain and grow market share. Thank you. Okay. Yeah, great question, Anna core or core to our business I would say a couple of things first of all on market share I am confident.

Speaker Change: Our market share performance. This year is going to improve from last year.

Speaker Change: I was not happy with our performance on share last year for perspective on a weighted basis, which we use as an internal metric. We don't talk about as much probably went on a weighted basis.

Speaker Change: <unk> globally about 40 bps, okay. So so not fallen off a cliff, but but not what we want so we want to be growing weighted share as well on a cohort basis, which was the one we usually talk to you all about.

Speaker Change: We're up in upper even in just under 40%. So thats below our goal of 50% or more of which I'd say, we were kind of jumping over that bar back in 2000 22021. So.

Speaker Change: Great. Thank you. Your next question is coming from Jason English from Goldman Sachs. Your line is live. Hey, good morning, folks. Thanks for slotting me in. Hey, Mike, a couple questions. I want to bring it back to volume.

Speaker Change: So I think.

Speaker Change: We are we are where we are today, what we're going to build from here I would say a couple of things.

Speaker Change: All that said probably the biggest challenge has been for us in North America related to the supply constraints that I just talked about.

Jason English: And specifically, I want to double click on your professional segment, where volume was a little bit weaker than we expected this quarter. If I zoom out and just look since 2019, so pre-COVID, volume's down like 23, 24 percent. And I know you mentioned right sizing and prepared remarks today. So my question is, what's going on there?

Speaker Change: I did want to know we've had strong gains and really really strong market positions in most of our largest markets just for reference in South Korea.

Speaker Change: Which is our second largest business, we're up probably about 20 share points over the last five years.

Speaker Change: And on Australia, and New Zealand were up somewhere between.

Speaker Change: $10 15 share points over the last five years.

Jason English: Where has all the volume gone? And how your margins suggest you're not getting meaningful de-leverage. How have you been able to offset the associated de-leverage effects of that lost volume? As always, Jason, you're right on the issue. So, but a good one.

Speaker Change: <unk> in the quarter, which is our <unk>.

Speaker Change: Fifth largest business.

Speaker Change: Was up over 300 bps on share just in the quarter. So we feel very good.

Speaker Change: One more on China, I think we're approaching almost 300 300 bps again on huggies in the quarter. So I think we feel very good about our gains in our largest markets. The exception has been North America, where we have underperformed, but that is improving.

Speaker Change: But I think if you look at the margin profile of the business, I think the team has done a great job addressing, I would say, the volume softness or volume change in the environment and a couple different things. One, we had to adjust rapidly to this work from home demand environment that kind of came on with the advent of COVID, as you might recall. And you may recall our washroom business, which is the majority of our business in KC Professional, tends to be higher, higher development in offices. And so that's really where the volume has gone. I would say right now that, on a category basis, that volume is running about 80 to 85% of what it was pre-pandemic, and it's not going to bounce back that quickly. The reality is, and I'm not sure, I'm not sure you're in your office at Goldman in New York every day.

Speaker Change: A lot of that I think it was just what I discussed what Jason we had some severe supply constraints.

Speaker Change: While we werent able to run our brand brand plans and the way that we wanted to run last year.

Speaker Change: We saw solid improvement in Q4, we were up or even in six of eight categories in sequentially improved in five of eight and so we feel pretty good about our trajectory.

Speaker Change: As I said, just a while ago.

Speaker Change: Our commercial execution capability has never been better.

Speaker Change: And we're going to gain share by bringing the right innovation with our customers, we're excited about executing well and Brigham and sustainable cost advantage to our tour.

Speaker Change: To our business.

Speaker Change: You mentioned private label.

Speaker Change: On the note I would recognize that yes, we have seen an uptick in private label in the past quarter or two.

Speaker Change: I think if you look at the scanner data was I think it was upper even in seven of eight categories.

Speaker Change: Say on private label, we are very very committed to having superior.

Speaker Change: And so, that's the same thing as we look around our offices; you know, we're not fully back in, right? And so it's only partial at best. So that's, that's, I would say an ongoing challenge in that business. But you know, I think our team has adjusted to that and treated it as a reality. We have the right sized some of the business, and some of it was from a cost perspective. The reality is we were doing a lot of volume and co-packing a lot of volume on the external market. And so I'd say, we haven't had to address fixed costs as much as you might have thought of. And so, and I think that's reflected. So I think the team has done a good job of recapturing margins from both a price perspective and a mixed perspective and also while growing volumes at the same time behind great innovations like our ICON dispenser, which I believe is really the best dispenser in that side of things. Anyways, so I think the team's done a great job and I think you can see that in the margins and, you know, definitely have recovered from pre-19 margins on That's helpful.

Speaker Change: Our superior value proposition at every price tier that we're in.

Speaker Change: So versus 2019, if you look on a longer perspective.

Speaker Change: Private label is down a bit in the premium segment is up significantly.

Speaker Change: And even today the premium segment continues to grow so it is clear that the value tier has picked up a bit.

Speaker Change: And our shares were impacted in the second and third quarter, Although I would say more from our supply constraints than private label trading I mean, we compete with private label, we're cognizant of that our approach.

Speaker Change: As to bring the right set of innovations, which we are accelerating and had been accelerating.

Speaker Change: Our customers are very supportive of it.

Speaker Change: There are a couple of categories, where we have a little more value offering Scott.

Speaker Change: Scott 1000 is a great value brand.

Speaker Change: I think it competes very very well against here and it's really really accepted by consumers and so again, we're cognizant that private labels kind of out there and that an uncertain or tough economic conditions value becomes much more important to the consumer and we're committed to having a great value proposition at every tier.

Speaker Change: I appreciate that. And I think another headwind to volume this year that you were talking about earlier in the year but not talking about so much lately were supply constraints. So can you remind us where they were, and how sizable they were?

Great very helpful. Thank you okay. Thanks Ana.

Speaker Change: Thank you. Your next question is coming from Steve powers from Deutsche Bank. Your line is live.

Steven Strycula: Hey, Thanks, guys good morning.

Yeah.

Steven Strycula: So maybe to start you talked about a lower rate of organic growth in the first quarter and also slightly back half weighted earnings profile for the year in the prepared remarks, and some of the comments this morning.

Speaker Change: I assume the lack of conversation around them suggests they're alleviated now, but can you confirm that? And I would imagine that overcoming those supply constraints should prove to be a tailwind, particularly in the first half of next year. Is that right? And how large of a tailwind?

Speaker Change: Echo that I guess, maybe can you provide just a little bit more color on the drivers there and maybe a little bit more specificity on how to think about.

Speaker Change: One could only hope, Jason. We could only hope. But actually, I think, first of all, a couple things. Yeah, we did have some pretty significant supply constraints in our North American consumer business for the majority of last year, definitely through Q3. And that had to do with some supply conditions with external suppliers, for example, on packaging, that made availability difficult across personal care.

Speaker Change: First first quarter trends relative to the balance of the year.

Speaker Change: Sure, Steve So I'll start by.

Speaker Change: By reiterating that were very encouraged by how we finished 2023.

Speaker Change: The strong foundation for us to build from and a.

Speaker Change: A position in which volumes have stabilized and we had a quarter in which were flat volume and mix was another 100 basis points of growth.

Speaker Change: As we think about the cadence of the year.

Speaker Change: Also, some in our Kleenex business, I think we talked about, you know, a key ingredient that we weren't able to get access to, that we developed a secondary source for during the course of the year. So those were kind of the big factors. I would say I think we mentioned that on the last quarter call. You know, we didn't make the biggest deal about it.

Speaker Change: Our first half second half balance of sales and earnings and our quarterly pacing is reflecting a combination of three things one our go to market plans.

Speaker Change: Two of our productivity initiatives and thirdly, the current shaping.

Speaker Change: Of currency headwinds that I talked about a little.

Speaker Change: A little while ago on organic sales growth.

Speaker Change: We were working through this challenge with our suppliers, with our customers, and they were fully aware of it. But, you know, it's not something that we communicated publicly. But I would say for the better part of the year, it did suppress our share price. I'm not saying that was the only driver, but I think it was a fairly significant driver.

Speaker Change: We see a relatively balanced across the year, but Q1 somewhat muted due to softer volumes on a sequential basis.

Speaker Change: We we have more programming coming into play as the year progresses, especially as Q2 kicks in and this includes incremental innovation that will be going into market at that stage. So we should see progressively improvement in volumes and a mix led organic growth.

Speaker Change: We have addressed those issues. You know, I'd say our commercial execution is going to be stronger than ever. We're really past all these constraints that I talked about.

Speaker Change: And, you know, our consumption is moving in the right direction. Our share has moved in the right direction, and many more. Got it. Good stuff. Thanks a lot.

Speaker Change: Growth in margins following Q1.

Speaker Change: Other bid that again as we think about Q1 in terms of volumes.

Speaker Change: We've built into the plan.

Speaker Change: Gradual improvement across the year.

Speaker Change: I'll pass it on and look forward to seeing you in March. Okay. Thanks, Jay. Thank you. Your next question is coming from Anna Lazul from Bank of America. Your line is live.

Speaker Change: And in Q1, and specifically, we're expecting another relatively flat volume quarter also because of the possibility that retail inventory softness pushes us slightly even below that level, but that's reflected in our outlook for the full year and we expect again volumes to pick up as the year progresses.

Anna Lazul: Hi, good morning, and thank you for the question. I wanted to follow up on market share in light of your exposure to private labels and, in your track channels; private label share has been creeping up in some of your categories. Just wondering, how are you thinking about brand investment with marketing versus promotions in order to maintain and grow market share? Thank you.

Okay. Okay. Thank you for that.

Speaker Change: Yes.

Speaker Change: Kind of I guess stepping back a little bit there's been a lot of investment.

Speaker Change: But you've highlighted over the course of time and personal care not just the past year, but the past few years product quality marketing commercialization et cetera.

Speaker Change: Core to our business, I'd say a couple things. First of all, on market share. I'm confident that our market share performance this year is going to improve from last year. Definitely, I was not happy with our performance on share last year for perspective on a weighted basis, which we use as an internal metric. We don't talk about it as much publicly, but on a weighted basis. We are down globally by about 40 dips. Okay, so not falling off a cliff, but not what we want.

Speaker Change: And I think.

Speaker Change: You see the results.

Speaker Change: In.

Speaker Change: Relatively strong.

Speaker Change: Market share trends in organic growth I guess on the other side.

Speaker Change: Consumer tissue and KCP continue to.

Speaker Change: Lagging.

Speaker Change: Struggled from a volume perspective.

Speaker Change: I guess as you think about 24.

Speaker Change: Both the relative balance of investment.

Speaker Change: The relative balance of <unk>.

Speaker Change: Contribution to growth can you can you give us a little.

Speaker Change: So we wanna be growing weighted shares as well. On a cohort basis, which was the one we usually talk to you all about, you know, we were up or even just under 40%. And so that's below our goal of 50% or more, of which, you know, I'd say we were kind of jumping over that bar back in 2020, 2021.

Speaker Change: Inside to how youre thinking about that and how we should think about.

Speaker Change: How those businesses are likely to trend.

Speaker Change: Yes.

Speaker Change: Relative to one another in the year.

Speaker Change: Yes, I'll just I'll make a couple of comments and then Nelson maybe you can give some additional detail, but look I would say we are running our consumer tissue business, some might say externally a little differently.

Speaker Change: So I think we are where we are today. What we're going to build from here, I'd say a couple of things. All that said, probably the biggest challenge has been for us in North America related to the supply constraints that I just talked about. I did want to know that we've had strong gains and really, really strong market positions in most of our largest markets. Just for reference, in South Korea, which is our second largest business, we're up probably about 20 share points over the last five years. And in Australia and New Zealand, we're up somewhere.

Speaker Change: Look at our consumer tissue business and see it as a as a premier consumer franchise and I'm proud of the strong margin recovery that we've made over a short period of time in this business.

Speaker Change: To note I would say on a volume basis. If you look at North America for the quarter are organic and tissue was up three and the volume was up two.

Speaker Change: Very excited about the volume kind of resiliency in that business I think it reflects the essential nature of the category as you know.

Speaker Change: Youre not moving away from from from the Bath category No matter what the condition is.

Speaker Change: So we recognize we have an important kind of responsibility for consumers.

Speaker Change: But I think the thing that has changed.

Speaker Change: 10 and 15 share points over the last five years. Andrex, in the quarter, which is our number, you know, fifth largest business, was up over 300 bps on share just in the quarter. So we feel very good, and one more thing, on China. I think we're approaching almost 300 bps again on the Huggies in the quarter. So I think we feel very good about our gains in our largest markets. The exception has been North America, where we have underperformed, but that is improving. A lot of that, I think, was just what I discussed with Jason. We had some severe supply constraints.

Speaker Change: In the past few years first of all the amount of inflation that's occurred on the on our overall business, but especially tissue has been not to be dramatic, but fundamentally historic right two years in a row of two <unk>.

Speaker Change: All time high ever was right and so our teams have done a phenomenal job I would say recovering.

Speaker Change: Recovering the margins on that business that were necessary to keep that franchise healthy.

Speaker Change: Healthy going forward.

Speaker Change: A couple of other things that we've done to improve our ability to manage the business better is a better risk management tools to get us more stability from costs and hopefully you guys are seeing that we're not talking a lot about that but with Nelson coming in result changed some of our practices with Tamara our chief supply officer coming in we've changed some of our supply chain.

Speaker Change: Well, we weren't able to run our brand plans in the way that we wanted to run last year, but we saw solid improvement in Q4. We were up or even in six of eight categories and sequentially improved in five of eight. And so we feel pretty good about our trajectory. As I said just a while ago, our commercial execution capability has never been better, and we're going to gain shares by, you know, bringing the right innovations which our customers are excited about, executing well, and bringing sustainable cost advantages to our business. You mentioned private label, and on the note, I would recognize that, yeah, we have seen an uptick in private label in the past quarter or two. I think if you look at the scanner data, I think it was up or even in seven of eight categories.

Speaker Change: Practices and so we're trying to reduce the volatility of the input costs.

Speaker Change: I would say if you looked at the margin recovery. The biggest driver is really really disciplined application of we call internally revenue growth management tools.

Speaker Change: But if.

Speaker Change: If we had not made those investments over the past five years, we would not have been able to move at the pace. We moved over the last two years on revenue management.

Speaker Change: And then.

Speaker Change: Probably the most important thing going forward is the fact that we're driving value added innovation and we recognize as a consumer franchise. We have have a great offering a superior offering I mentioned in the U K <unk> I think we hit about a 33 or 34 a share in the quarter.

Speaker Change: You know, I'd say on private label, we are very, very committed to having a superior value proposition at every price point that we are in. So, versus 2019, if you look on a longer perspective, private labels are down a bit, and the premium segment is up significantly. And even today, the premium segment continues to grow. So it is clear that the value tier has picked up a bit, and our shares were impacted in the second and third quarters, although I would say more from our supply constraints than private label trading. I mean, we compete with private label.

Speaker Change: Our price gap has widened over the past three years, but our quality has improved significantly and we've invested in new technologies in our European tissue business.

Speaker Change: Allowing us to differentiate that product and so we feel good about our position on tissue. There are some pockets of challenge.

Speaker Change: Some markets can be very tough and so we're able to operate in those but we're really pleased with the kind of rapid recovery of margins and how our teams are managing that business right now.

Speaker Change: And just to build on what Mike was saying in and address the investments over the last few years as you would've seen we've stepped it up both on advertising support for our brands and capabilities.

Speaker Change: We're cognizant of that. You know, our approach, Anna, is to bring the right set of innovations, which we are accelerating and have been accelerating, and our customers are very supportive of it. There are a couple categories where we have a little more value offering. Scott 1000 is a great value brand, but I think it competes very, very well in its tier and is really, really accepted by consumers.

Speaker Change: That are allowing us to emerge much stronger.

Speaker Change: From this super cycle of inflation that we've seen specifically.

Speaker Change: Specifically for 2023.

Speaker Change: Our advertising budget overall increased to more than 5% of net sales, which represented roughly about 100 basis points of increase versus the prior year.

Speaker Change: And thats about $200 million in absolute terms.

Speaker Change: As you think about this year.

Speaker Change: Steve.

Steven Strycula: We will still keep expanding that but it'll be at about half the pace of what we saw in 2023 and the other bit is in terms of overheads, which would include some of the capabilities. We invested in we are projecting overheads for the year to be largely flat in dollar terms year over year.

Speaker Change: And so, again, we're cognizant that private label's kind of out there and that in uncertain or tough economic conditions, value becomes much more important to the consumer, and we're committed to having a great value proposition. Great, very helpful. Thank you. Okay. Thanks, Anna.

Steven Strycula: So that can give you a perspective of what we're seeing in terms of investments and overall spend in 2024 building on what we did in the past few years.

Speaker Change: Okay, great. Thanks, Thanks, a lot and I'll pass it on Okay. If you could take.

Speaker Change: Thank you. Your next question is coming from Steve Powers from Deutsche Bank. Your line is live. Hey, thanks, guys. Good morning.

Speaker Change: Maybe one more question that would be great.

Speaker Change: Certainly your next question is coming from Andrea Teixeira from Jpmorgan. Your line is live.

Steven Strycula: Hey, so maybe to start, you talked about a lower rate of organic growth in the first quarter and also, you know, a slightly back half weighted earnings profile for the year in the prepared remarks and some of the comments this morning echo that. I guess, maybe, can you provide just a little bit more color on the drivers there and maybe a little bit more specificity on how to think about first quarter trends relative to the balance of the year? Thanks. Sure, Steve, so I'll start by... By reiterating that we're very encouraged by how we finished 2023, you know, a strong foundation for us to build from and a position in which volumes have stabilized, and we had a quarter in which we flattened volumes and mixed with another 100 basis points of growth. As we think about the cadence of the year, our first half, and second half, balance of sales and earnings. And our quarterly placing is reflecting a combination of three things. One, our go-to-market plan, and our productivity initiative. And thirdly, you know, the current shape and design of CurrencyHeadwinds that I talked about a little while ago.

Andrea Teixeira: Thank you good morning.

Andrea Teixeira: Welcome Chris So can you I have one question and a clarification on your comments now.

Andrea Teixeira: Towards the end of the last question.

Chris Jakubik: First can you breakdown the 'twenty 'twenty four guide by Division.

Chris Jakubik: Assuming you are still looking at like between to get to your number mid single digits for personal care.

Chris Jakubik: Growth in volume, there, because thats, where you get most of the growth.

Chris Jakubik: And then tissue to be flattish customer customer T shirts would be flattish.

Chris Jakubik: Or I took at a low single and then professional has to be negative and especially in the first quarter as you lap those of those contract.

Chris Jakubik: So why I ask is that historically for good reason, it's a better ROI, but you're more dependent on personal care than the others. So and you have been to your point and to your benefit getting market share, particularly in the U S and China in diapers in Fem care. So I was wondering how you feel about the comps and how you feel.

Chris Jakubik: About.

Chris Jakubik: Being able to meet this number in between low single mid single I mean at least at the high end of the guide. It does imply that you have as strong volume growth in personal care. So I was wondering how you and how you could decompose by division and then a clarification on the reinvestment you said announcing you mentioned 200.

Steven Strycula: On organic sales growth, we see relatively balanced across the year, but Q1 somewhat muted due to softer volumes and a sequential... We have more programming coming into play as the year progresses, especially as Q2 kicks in, and this includes incremental innovation that will be going into the market at that stage. So we should see gradually improvement in volumes and a mixed-lead organic growth and margins following Q1. The other bit that, again, as we think about Q1 in terms of volume, you know we've built into the plan a gradual improvement across the year. And in Q1, specifically, we're expecting another relatively flat volume quarter, also because of the possibility that retail inventory softness pushes us slightly even below that level.

Chris Jakubik: <unk> $200 million.

Chris Jakubik: Was the actual number roughly.

Chris Jakubik: And then this year would be about half of it and I was wondering what is the incremental updates more displays and shelf space promo what is going to be the main source because to be fair you've been to your point investing for a while now since Mike took over five years ago.

Chris Jakubik: Andre Great Great set of questions, maybe I'll start with the bottom half first and then I'm also kind of the comps some of the organic drivers.

Chris Jakubik: On the investment again, my priority would be focus on advertising.

Chris Jakubik: We get great returns on advertising both from a.

Chris Jakubik: Certainly from a traditional TV and stuff, but more importantly, the digital and the returns are very very high and so our focus is there I mean, we are going to be I would say competitive on the promotional front on a trade promotion front, but that said that's not how we're going to drive our business.

Speaker Change: But that's reflected in our outlook for the full year, and we expect, again, volumes to pick up as the year progresses. Okay, okay. Thank you for that.

Speaker Change: And I guess, you know, kind of, I guess, stepping back a little bit, there's been a lot of investment that you've highlighted over the course of time in personal care, not just the past year, but the past few years, product quality, marketing, commercialization, etc. And I think you see the results in, you know, relatively strong market share trends and organic growth. I guess, on the other side, you know, consumer tissue and KCP continue to, you know, lag and, you know, struggle from a volume perspective. So, you know, as you think about 24, and both the relative balance of investment and the relative balance of contribution to growth, can you give us a little insight into how you're thinking about that and how we should think about how those businesses are likely to trend, you know, relative to one another in Hey, yeah, I'll just make a couple comments, and then Nelson, maybe, can give some additional detail.

Chris Jakubik: We do feel like we get great value and we are break creative both on things like huggies on U by Kotex.

Chris Jakubik: Across our business on Scott 1000 last long.

And so we got great copy and we're going to invest there.

Speaker Change: Yes, so in terms of kind of the breakdown by by segment I mean, we expect personal care to be growing in the.

Speaker Change: Mid to high single digits, So think of mid single digits overall and at the high end and in the other two segments will be growing in the low single digits and that kind of gets you to the algorithm that we've provided as I stated at the beginning our plan is a vol mix largely led plan.

Speaker Change: And keep in mind that pricing will be around 200 basis points of that and that's largely related to.

Speaker Change: Currency related movements in Hyperinflationary economies. So that's kind of a breakdown on how you should be thinking.

Speaker Change: Of our segment growth next year.

Speaker Change: But look, see, I would say we are running our consumer tissue business, you know, some might say externally, a little differently. I look at our consumer tissue business and see it as, as a, you know, premier consumer franchise. And I'm proud of the strong margin recovery that we've made over a short period of time in this business. On to note, I would say on a volume basis, if you look at North America, for the quarter, our organic and tissue volume was up three, and I'm very excited about the volume kind of resiliency in that business. I think it reflects the essential nature of the category, as you know, you're not moving away from the bath category, no matter what the condition is.

Speaker Change: Thank you.

Speaker Change: Thank you that concludes our Q&A session I will now hand, the conference back to Chris <unk> for closing remarks. Please go ahead. Thanks.

Thanks, everybody for joining us today for the analysts that have follow up questions, we'll be around all day and beyond that we're looking forward to seeing everybody in March.

Speaker Change: Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.

Speaker Change: And so, you know, we recognize we have an important kind of responsibility for consumers. But I think the thing that, you know, has changed in the past few years is, first of all, the amount of inflation that's occurred in our overall business, but especially tissue, has not been dramatic but fundamentally historic, right? Two years in a row of 2x what the all-time high ever was, right?

Speaker Change: And so our teams have done a phenomenal job, I would say, recovering, you know, recovering the margins on the business that were necessary to keep that, you know, franchise healthy going forward. A couple other things that we've done to improve our ability to manage the business better are hey, better risk management tools, you know, to get us more stability from costs. And hopefully, you guys are seeing that. We're not talking a lot about it, but, you know, with Nelson coming in, we've changed some of our practices. With Tamara, our chief supply officer, coming in, we've changed some of our supply chain practices, and we're trying to reduce the volatility of the input cost.

Speaker Change: I would say, if you looked at the margin recovery, the biggest driver is a really, really disciplined application of what we call internally revenue growth management tools. But, you know, that if we had not made those investments over the past five years, we would not have been able to move at the pace we moved over the last two years on revenue management. And then, you know, probably the most important thing going forward is the fact that we're driving value-added innovation. And we recognize that, as a consumer franchise, we have to have a great offering, a superior offering. I mentioned in the U.K. Andrex, I think we hit about a 33 or 34 share in the quarter.

Speaker Change: You know, our price gap has widened over the past three years, but our quality has improved significantly. And we've invested in new technologies in our European tissue business, which is allowing us to differentiate that product. And so we feel good about our position in tissue. There are some pockets of challenge. Some markets, you know, can be very tough.

Speaker Change: And so, we're able to operate in those. But, you know, we're really pleased with the kind of rapid recovery of margins and how our teams are managing. And just to build on what Mike was saying and address the investments. Over the last few years, as you would have seen, we've stepped it up both on advertising support for our brands and the capabilities that are allowing us to emerge much stronger from this super cycle of inflation that we've seen. Specifically, for 2023, our advertising budget overall increased to more than 5% of net sales, which represented roughly about 100 basis points of increase versus the prior year. And that's about 200 million in absolute terms.

Speaker Change: As you think about this year... Steve, we will still keep expanding that, but it'll be at about half the pace of what we saw in 2023. And the other bit is, in terms of overheads, which would include some of the capabilities we invest in... We are projecting overheads for the year to be largely flat in dollar terms year-over-year. So that can give you a perspective of what we're seeing in terms of investments and overall spend in 2024, building on what we did in the past. Okay, great. Thanks. Thanks a lot.

Speaker Change: [music].

Speaker Change: I'll pass it on. Okay. If we could take maybe one more question, please. Certainly. Your next question is coming from Andrea Teixeira from JPMorgan. Your line is live. Thank you. Good morning.

Andrea Teixeira: And welcome, Chris. So can you please allow me one question and clarification on your comments now? So towards the end of the last question. First, can you break down the 2024 guide a bit by division? I'm assuming you're still looking at like between to get to your number, meet single digits for personal care, some growth in volume there, because that's where you get most of the growth and then tissue to be flattish, consumer tissue to be flattish or to grow low single digits, and then professionals to be negative, especially in the first quarter as you lap those those contracts. The reason why I ask is that historically, for a good reason, it's a better ROI, but you're more dependent on personal care than others.

Andrea Teixeira: So, and to your point and to your benefit, getting market share, in particular in the US and China for diapers and Femcare. So I was wondering how you feel about the competition and how you feel about being able to meet this number in between low single and mid single. I mean, at least at the high end of the guide, it does imply that you have strong volume growth in personal care. So I was wondering how you feel and how you could decompose by division.

Andrea Teixeira: And then a clarification on the reinvestment, you said, and also you mentioned two hundred million dollars was the actual number roughly of investment. And then this year it would be about half of it. And I was wondering what the incrementality is? It's more displays and shelf space promotion. What is going to be the main source? Because, to be fair, you've been investing for a while now since Mike took over five years ago.

Speaker Change: Thank you, Andrea. Great, great set of questions. Maybe I'll start with the bottom half first and then, and then mostly kind of decompile some of the organic drivers of the investment.

Speaker Change: Again, my priority would be focused on advertising. You know, I think we get great returns on advertising, both from, you know, certainly from traditional TV and stuff, but more importantly, from digital, and the returns are very, very high. And so our focus is there. I mean, we are going to be, I would say, competitive on the promotion front in the trade promotion front. But that said, that's not how we're going to drive our business.

Speaker Change: Good morning, and welcome to Kimberly Clark's fourth quarter 2023 earnings question and answer session.

Speaker Change: I'll now hand, the call over to Christian <unk>, Vice President Investor Relations. Please go ahead.

Christian: Hello, everyone. This is Chris Jakubik head of Investor Relations at Kimberly Clark and welcome to our Q&A session for our fourth quarter and full year 2023.

Speaker Change: You know, we do feel like we get great value and we have great creative both on things like Huggies, on You Buy Kotex, across our business, on Scott 1000, which lasts a long time, you know, and so we've got great copy and we're gonna invest there. Yes, so in terms of kind of the breakdown by segment, I mean, we expect personal care to be growing in, you know, mid to high single digit So think of mid single digits overall and at the high end. And in the other two segments, we will be growing in the low single digits. And that kind of gets you to the algorithm that we provide.

Christian: Results.

Christian: During our remarks today, we will make some forward looking statements that are based on how we see things today actual results may differ due to risks and uncertainties and these are discussed in our earnings release and our filings with the SEC. We will also discuss some non-GAAP financial measures today.

Christian: non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results and you can find the GAAP to non-GAAP reconciliations within our earnings release and supplemental materials posted at Investor Doc Kimberly Clark Dot com.

Christian: Before we begin I'm going to hand, it over to our chairman and CEO, Mike <unk> for a few quick opening comments. Okay. Thank you, Chris and first of all I'd like to just welcome Chris to Kimberly Clark is his first earnings call with us but.

Mike: It's probably a triple digit number in earnings calls that he has done his career. So welcome welcome to Casey, Chris Hey, I'd like to just start by sharing that we're really proud of our performance in 2023, but of course, we're not yet satisfied we've built a strong foundation and position Kimberly Clark for our next chapter of growth.

Speaker Change: As I stated at the beginning, our plan is a vol-mix, largely-led plan. And keep in mind that pricing will be around 200 basis points of that, and that's largely related to currency-related movements and hyperinflationary economies. So that's kind of the breakdown on how you should be thinking about our segment, Growth Next. Thank you.

Mike: These past few years, we've consistently invested to build a consumer centric organization, while navigating unprecedented challenges.

Speaker Change: That concludes our Q&A session. I will now hand the conference back to Chris Jakubik for closing remarks. Please go ahead.

Chris Jakubik: Thanks, everybody, for joining us today. For the analysts that have follow-up questions, we'll be around all day. And beyond that, we're looking forward to seeing everybody in March. Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day.

Chris Jakubik: Thank you for your participation. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning and welcome to Kimberly Clark's fourth quarter 2023 earnings question and answer session. I'll now hand the call over to Chris Jakubik, Vice President, Investor Relations. Please go ahead.

Speaker Change: Certainly everyone. At this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.

Mike: We do ask that while posing a question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

Mike: We do ask that participants please ask one question and one follow up if.

Mike: If you have any additional questions. Please reenter the queue.

Chris Jakubik: Thank you. And hello, everyone. This is Christopher Kubrick, Head of Investor Relations at Kimberly-Clark. And welcome to our Q&A session for our fourth quarter and full year 2020. Resolve. During our remarks today, we will make some forward-looking statements that are based on how we see things today. Actual results may differ due to risks and uncertainties, and these are discussed in our earnings release and our filings with the SEC. We will also discuss some non-GAAP financial... Non-GAAP financial measures should not be considered a replacement for, and should be read together with, GAAP results.

Mike: Once again, if you have any questions or comments. Please press star one on your phone.

Mike: Your first question is coming from Dara <unk> from Morgan Stanley. Your line is live.

Dara: Hey, guys.

Dara: Just wanted to touch on the organic sales growth guidance for next year low to mid single digit seems pretty robust relative to the 3% this quarter and just starting out the year lower than Q1, obviously you mentioned the 200 basis points from the Hyperinflationary markets next year in the prepared remarks, so that's part of it.

Dara: Maybe give us a sense of how much those markets contributed in Q4, and then just as you look at the base business ex those markets, maybe some commentary on pricing versus volume and what you're expecting and if you could also just touch on market share performance in Q4, the U S track channels, a week or so.

Chris Jakubik: You can find the gap-to-non-gap reconciliations within our earnings release and the supplemental materials posted at investor.kimberlyclark.com. Before we begin, I'm going to hand it over to our chairman and CEO, Mike Hsu, for a few quick opening comments. Okay, thank you, Chris. And first of all, I'd like to just welcome Chris to Kimberly Clark; this is his first earnings call with us, but it's probably triple digits in earnings calls that he's done in his career. So welcome. Welcome to KC, Chris.

Dara: Any update on how you're feeling about your market share performance and plans on that front as you look out to 'twenty four it will be helpful.

Speaker Change: Thanks, Tara maybe I'll start with.

Speaker Change: Maybe as you as you kind of tee up there the state of the consumer, particularly in developed markets I'd say, our underlying category growth.

Speaker Change: Across personal care consumer tissue and professional remains pretty robust both in absolute terms and I think if you look across and relative to other broader staples or.

Speaker Change: And revenue per user gains and so we're working on that so so overall I think the consumer right now still remains despite.

Speaker Change: You might argue is a fairly mixed kind of consumer picture.

Speaker Change: The consumer remains pretty healthy we're confident in our ability to elevate our categories and expand the market further.

Speaker Change: The consumer picture I said its somewhat mixed employment remains strong wage growth is up.

Speaker Change: But I think it's also probably fair to say from our side that the full effects of all the rate hikes and all the economic policy impacts are not fully materialized in the consumer so that all said the categories were pretty robust in North America, just to give you a reference point.

Speaker Change: North America category value was up six in the fourth quarter and up eight for the year. So that's a pretty solid number again I'll chalk that up to the fact that there's low substitution of our categories and that makes our categories a lot more resilient than other staples categories that I've worked in the past.

Speaker Change: We still also see pretty good demand for <unk>.

Speaker Change: Premium products and we're seeing that in a broad array of markets, including North America surprisingly you might say in a market like Argentina still Brazil, China of course, and so so we're very enthused about our approach with elevate elevate our categories and expanding our markets and we believe that still working in still appropriate.

Dara Mosinian: Hey, guys. I just wanted to touch on the organic sales growth guidance for next year; low to mid single-digit seems pretty robust relative to the 3% this quarter and just starting out the year lower in Q1. Obviously, you mentioned the 200 basis points from the hyperinflationary markets next year in the prepared remarks. So that's part of it.

Speaker Change: Even though we recognize we've got to be able to offer great value in all price tiers.

Speaker Change: So I'll pause there I know I threw a lot at you. So I know there are multiple parts of your question I don't know if you wanted to.

Speaker Change: Nelson as you're aware there was a question on the decomposition of our topline growth for the year and how it relates to Q4, let me address that a little bit of Dara.

Speaker Change: Maybe, A. Give us a sense of how much those markets contributed in Q4. And then, just as you look at the base business exoskeleton markets, maybe some commentary on pricing versus volume and what you're expecting. And if you could also just touch on market share performance in Q4. The U.S. track channels are weaker, so just any update on how you're feeling about your market share performance and plans on that front as you look out to 24 would be helpful. Okay. Thanks, Tara.

Speaker Change: To recap the fourth quarter was a quarter in which we attained.

Speaker Change: Maybe I'll start with, maybe as you kind of tie up there, the state of the consumer, particularly in developed markets, you know, I'd say our underlying category growth across personal care, consumer tissue, and professional remains pretty robust, both in absolute terms, and I think if you look across it relative to other broader state markets. Our products, I'll remind you, are daily essentials, and unlike some categories, substitution of our categories is fairly low.

Speaker Change: Q4.

Speaker Change: Okay, and the volume pick up as we go through the year or is that more.

Speaker Change: We're pretty pleased Dara I think I think we've made very very solid progress on volume and consumers responded very favorably on our categories.

Speaker Change: So I'd say first of all our next chapter, which I think we're turning the page and.

Speaker Change: Shifting to a volume mix driven plan.

Speaker Change: Just returning to that.

Speaker Change: Was kind of our approach pre pandemic and so we're going back to that so contribution from pricing to help offset the the record of inflation that we've got and it's going to recede and has already started receding.

Speaker Change: There might be a need to address some particular higher costs in some markets or locations.

Speaker Change: But that's going to be pretty surgical.

Speaker Change: And.

Speaker Change: We will likely reflect if theres pricing reflect inflation at local levels, but overall I think we're feeling very good about driving the volume on our business, we have seen our businesses start to start to improve.

Speaker Change: North America category value was up six in the fourth quarter and eight up eight for the year So that's a pretty solid number again I'll chalk that up to the fact that you know There's low substitution in our categories and that makes our categories a lot more resilient than other staples categories that I've worked in in the past we still also Darcy pretty good demand for Premium products and we're seeing that in a broad array of markets including in North America You know surprisingly you might say in a market like Argentina still Brazil China, of course And so so we're very enthused about our approach with elevate You know elevate our categories and expanding our markets and we believe that's still working and still appropriate even though we recognize We've got to be able to offer great value at all prices, So, I'll pause there. I know that I threw a lot at you. So, I know there were multiple parts to your question. I don't know, Tara, if you wanted to, yeah.

Speaker Change: The North America on a share perspective in the fourth quarter and believe we have the right mix and growth drivers in our plan to drive the business going forward.

Speaker Change: Thanks, guys.

Speaker Change: Okay. Thank you Dara.

Speaker Change: Thank you. Your next question is coming from Lauren Lieberman from Barclays. Your line is live.

Lauren R. Lieberman: Thanks, Good morning, Hi, I wanted to just with chef focused maybe a little bit to talk a bit about the cost picture and for savings.

Lauren R. Lieberman: Both of those the benefit from deflation and for savings in the fourth quarter were a bit lighter I think than than expected certainly than we had modeled so.

Lauren R. Lieberman: It's rare to see that so if you could just maybe provide some perspective on why the outlook moving forward and maybe how FX plays into that if at all.

Speaker Change: Sure. So let me start Lauren by saying that this face of cost recovery and supply chain stabilization.

Speaker Change: Think of it as largely behind US a lot of the disruptions and the Super cycle that we saw our expectation is for that did not happen in the foreseeable future and certainly in 2024 based on what we know today.

Tara: Nelson, as you're wondering... Yeah, there was a question on the decomposition of, you know, our top-line growth for the year and how it relates to Q4. Let me address that a little bit, Adara. I think that to recap, the fourth quarter was a quarter in which we attained..., you know, flat volumes, and pricing was only 2% of the contribution, with mix being 1. That 2% was largely a hyperinflationary economy. And as you think about this year, this is going to be a year in which volumes begin to pick up from Q2 onwards, and we expect pricing to be in that 200 basis point range, right in line with what we saw in the last quarter of the year. And that pricing is really going to be driven, based on what we expect today, by hyperinflationary economies.

Speaker Change: So thinking about costs as a whole first our aggregate cost basket is easing and inflation, but there is no deflation because there are several components that I would like.

To unpack.

Speaker Change: We expect the 24 cost environment to be more stable.

Speaker Change: But we will still remain at higher levels of costs, mostly in line with what we've seen in this super cycle. These past three years.

Speaker Change: As you know core commodities like bulk resin energy in dollar terms are expected to be somewhat favorable following the trends that we saw in the back half of last year.

Speaker Change: However, if you think of other components of our cost basket like distribution logistics and labor inflation, that's actually going to remain a headwind.

Speaker Change: And this year in 'twenty, four and that's pretty much offsetting the tailwind that we're seeing on the core commodities, which leaves us with currency related inflation on imported materials largely impacting <unk>.

Tara: So the profile is really, on the pricing side, very similar to what we saw in Canada. Okay, and the volume pickup as we go through the year, is that more? pricing moderates?

Adara: Is it that you've seen some early signs in whatever the geographies or product categories are that you're seeing some volume recovery, or is it more just sort of a natural assumption over time as pricing recovers? We're pretty pleased, Dara. I think we've made very, very solid progress on volume, and consumers have responded very favorably to our categories. So I'd say, first of all, our next chapter, which I think we're turning the page and shifting to a volume-mix driven plan, which is returning to that, which was kind of our approach pre-pandemic. And so we're going back to that. So contribution pricing to help offset the record inflation that we've got is going to fall and has already started falling.

Speaker Change: As a perspective the overall.

Speaker Change: Net cost headwind. When you include all of the components is projected to be around 100 basis points for the year, which we see is much more manageable than will be seen in the past, we've got very strong productivity plans and.

Speaker Change: And a little need to price outside of local inflation in these hyper inflationary markets.

Turning to force.

Speaker Change: Our productivity targets.

Speaker Change: The outlook we provided.

Speaker Change: Provided.

Speaker Change: Shows that we feel very good about our ability to continue generating strong productivity you saw that we ended last year with <unk> results of around $325 million.

Adara: You know, there might be a need to address some particular higher costs in some markets or locations. But I think we're feeling very good about driving the volume of our business. We have seen our businesses start to improve, including North America on a shared perspective in the fourth quarter and believe we have the right mix and growth drivers in our plan to drive. Thanks, guys. Okay, thank you, Doc.

Speaker Change: And it's important to highlight that over the last 20 years <unk> has delivered a little north of $6 billion of cumulative identify productivity that is flowing through the P&L.

Speaker Change: More recently and we've been talking about it.

Even at your conference in September.

Speaker Change: Evolving our culture towards an end to end integrated cost management perspective really focused on gross productivity.

Adara: Thank you. Your next question is coming from Lauren Lieberman from Barclays. Your line is live. Great, thanks. Good morning.

Speaker Change: When we when we talk about the future a little more.

Speaker Change: Okay great.

Lauren R. Lieberman: So if you could just maybe provide some perspective on why and the outlook moving forward and maybe how FX plays into that, if at all. Sure, so let me start, Lauren, by saying that, you know, this phase of cost recovery and supply chain stabilization would think of it as largely behind us, a lot of the disruptions and this super cycle that we saw. Our expectation is for that to not happen in the foreseeable future, and certainly in 2024, based on what we know. So, thinking about costs as a whole, first, our aggregate cost basket is easing in inflation, but there's no deflation, because there are several components that I'd like to unpack.

Speaker Change: Do we think about that in the next quarter or two of the year and then I'll.

Speaker Change: Also overall, just kind of risks risk management around FX. Because this time last year. There was also kind of a bit it wasn't hyperinflation, but a bit of a surprise to the street in terms of the expected impact from transactional FX. So and that's the case again this year so path forward in Argentina, the devaluation of monetary assets piece and then I'll.

Speaker Change: Overall risk management on currency and transaction, Okay, Hey, Laura Thanks for the question.

Lauren R. Lieberman: We expect the 24-cost environment to be more stable, but we will still remain at higher levels of costs, mostly in line with what we've seen in this super cycle these past three. As you know, core commodities like pulp, resin, and energy in dollar terms are expected to be somewhat favorable following the trends that we saw in the back half of last year. However, if you think of other components of our cost basket, like distribution, logistics, and labor inflation, that's actually going to remain a headwind this year and the next, and that's pretty much offsetting. Thanks very much, are emerging market hyperinflationary markets which will need to be addressed, and we've been addressing that over the past years, and we intend to do that in the course of the year. Just as a perspective, the overall net cost headwind when you include all of the components is projected to be around 100 basis points for the year, which we see as much more manageable than what we've seen in the past. We've got very strong productivity plans, and little need to price outside of local inflation in these hyperinflationary markets.

Speaker Change: Hey, let me, let me start with the overall and the path forward I will say, hey, we're staying the course, but work of course going to balance.

Speaker Change: Potential against the inherent volatility in the business and so we're going to remain prudent.

Speaker Change: I do want to say I'm really inspired and we've got people operating in some difficult conditions in Argentina and also other markets. So as a company we're really inspired by the impact our employees make in these markets.

Speaker Change: Im really proud to shoulder that responsibility and serving our consumers in these difficult conditions at the same time I will say, we will not just hanging around where conditions become untenable and then of course, you would double play can say whats untenable I'll, let you know when we see it but certainly if.

If we can make product or if we can't convert currency at some point that becomes somewhat untenable, but right now we're working our way through it in multiple markets like Argentina like Ukraine.

Speaker Change: And so again.

Speaker Change: The high level answer on path forward as we are staying the course.

Speaker Change: Yes, and Laurent to build on.

Lauren R. Lieberman: Turning to force and our productivity target, the Outlook we've provided... It shows that we feel very good about our ability to continue generating strong productivity. You saw that we ended last year with FORS results of around $325 million. And it's important to highlight that over the last 20 years, FORS has delivered a little north of $6 billion of cumulative identified productivity that has flown to the P&L.

Speaker Change: Yes, sorry keep going.

Speaker Change: Okay. So the impact above the operating profit line was $115 million for the year and about $70 million for the quarter.

Speaker Change: That netted off some of the interest income that we perceive on cash balances in Argentina led to a net impact of about 16 on EPS in the year and about nine of EPS in the quarter.

Lauren R. Lieberman: More recently, and we've been talking about it even at your conference in September, we're evolving our culture towards an end-to-end integrated cost management perspective really focused on gross productivity. We're building a proactive multi-year pipeline of initiatives. We see our pipeline of gross productivity out to 36 months pretty strong, and that should flow to the bottom line. And this is reflected in the outlook we're providing. I'm excited to talk more about, you know, our transition to gross productivity and integrated margin management at our March meeting when we when we talk about it. Okay, great. And then, I could just also follow up on Argentina a bit.

Speaker Change: As we fast forward to this year.

Speaker Change: We are.

Speaker Change: Projecting about half of that impact both in the other income and expense line and then on EPS we were.

Speaker Change: We'll see a little bit off.

Speaker Change: More of that impact in the first half of the year, it's reflected in part of our outlook, but that's what projected at this stage based on what we know.

Speaker Change: Okay, great. Thanks, so much okay. Thanks, Laura.

Speaker Change: Thank you. Your next question is coming from Jason English from Goldman Sachs. Your line is live.

Jason English: Hey, good morning folks Thanks for Slotting me in Hey, Jay.

Jay: Hey, Mike a couple of questions I want to bring it back to volume.

Mike: Specifically I want to double click on your professional segment.

Mike: Where volume was a little bit weaker than we expected this quarter, if I zoom out and just look since 2019, so pre COVID-19.

Speaker Change: So, I guess a couple parts of this question, the path forward for Argentina, whether the devaluation of the monetary assets is one-time in nature, or do we need to build this in, or how do we think about that in the next quarter or two of the year? And then, also overall, just kind of risk management around FX because this time last year there was also kind of a bit, it wasn't hyperinflation, but a bit of a surprise to the street in terms of the expected impact from transactional FX. So, and that's the case again this year. So, the path forward in Argentina, the devaluation of monetary assets piece, and then all this overall risk management on currency and transactions. Okay. Hey Lauren, thanks for the question.

Mike: <unk> down like 23, 24%.

Speaker Change: And I know you mentioned right sizing in prepared remarks today. So my question is whats going on there where it has all the volume gone.

Speaker Change: And how your margin suggests youre not getting meaningful deleverage how have you been able to offset the associated deleverage effects of that loss volume.

Speaker Change: <unk> would lead to this work from home demand environment that kind of came on with the with the advent of Covid as you might recall and.

Speaker Change: You may recall, our washroom business, which is the majority of our business and KC professional.

Speaker Change: Tends to be higher higher development and offices and so.

Speaker Change: That's really where the volume has gone I would say right now that that volume.

Speaker Change: On a category basis is running about 80% to 85% of what it was pre pandemic and it's not going to bounce back quickly throughout the route is.

Speaker Change: Not sure I am not sure you are in your office at Goldman in New York every day and so so that's the same thing as we look around our offices, we're not fully back yet right and so it's partial at best So thats.

I would say an ongoing challenge in that business, but I think our team has adjusted to that and treated as a reality, we have right sized some of the business and some of it was from a cost perspective.

Speaker Change: Reality is we were doing a lot of volume and co packing a lot of volume on the external market and so I would say, we haven't had to address fixed costs as much as you might have might have thought of and so and I think that's reflected.

Lauren R. Lieberman: I'll let you know when we see it. But certainly, if we can't make product or if we can't convert currency, at some point, that becomes somewhat untenable. But right now, we're working our way through it in multiple markets, like Argentina and Ukraine. And so, again, that's the high-level answer on the path forward is we're staying in the Yeah, and Lauren, to build on, you know, what I told Dara on the pricing and hyperinflationary, so a few things. As we think of last year, the full-year impact of the mark-to-market of our net monetary position in other income and expense lines... Sorry, keep going.

Speaker Change: The team has done a good job of recapturing margins from a both from a price perspective.

Speaker Change: Mix perspective, and also while growing volumes at the same time behind great innovations like our icon dispenser, which I believe is really the best dispenser.

Speaker Change: That side of the business.

Speaker Change: So anyway, so I think the team's done a great job and I think you can see that in the margin and definitely have recovered from 2019 margins on that business and actually exceeding at this point.

Speaker Change: That's helpful. I appreciate that.

Speaker Change: I think another headwind to volume this year that you were talking about early in the year, but not talking about so much of late where supply constraints.

Speaker Change: Okay, so the impact above the operating profit line was $115 million for the year and about $70 million for the. That netted off some of the interest income that we perceive on cash balances in Argentina led to a net impact of about $0.16 on EPS for the year and about $0.09 for the. As we fast-forward to this year... We are. Projecting about half of that impact both in the other income and expense lines and then on EPS, we will see a little bit of that impact in the first half of the year. It's reflected in part of our outlook, but that's what's projected at this stage based on what we think. Okay, great. Thanks so much.

Speaker Change: That made availability difficult across personal care also some in our clinics business I think we've talked about a key ingredient that we werent able to get access to that we developed a secondary source through during the course of the year. So those are the kind of the big factors I.

Speaker Change: Okay. Thanks, Lauren. Thank you. Your next question is coming from Jason English from Goldman Sachs. Your line is live. Hey, good morning, folks. Thanks for slotting me in. Hey, Mike, a couple questions. I want to bring it back to volume.

Speaker Change: I would say I think we mentioned that on the last quarter call.

Jason English: And specifically, I want to double click on your professional segment, where volume was a little bit weaker than we expected this quarter. If I zoom out and just look since 2019, so pre-COVID, volumes are down like 23, 24 percent. And I know you mentioned right sizing and prepared remarks today. So my question is, what's going on there?

Speaker Change: But I would say for the better part of the year that did suppress our share performance.

Speaker Change: Not saying that was the only driver, but I think it was a fairly significant driver we have addressed those issues.

Speaker Change: Our commercial execution is going to be stronger than ever really passed all these constraints that I talked about.

Speaker Change: And our consumption is moving in the right direction. Our share has moved in the right direction in the fourth quarter as well in North America.

Jason English: Where has all the volume gone, and how do your margins suggest you're not getting meaningful de-leverage? How have you been able to offset the associated de-leverage effects of that lost volume? As always, Jason, you're right on the issue. So, good one.

Speaker Change: Got it good stuff. Thanks, a lot I'll pass it on and look forward to see you in March Okay. Thanks Matthew.

Thank you. Your next question is coming from Anna <unk> from Bank of America. Your line is live.

Anna: Hi, Good morning, and thank you for the question I wanted to follow up on market share in light of your exposure to private label than.

Speaker Change: But I think if you look at the margin profile of the business, I think the team has done a great job addressing, I would say, the volume softness or volume change in the environment and a couple different things. One, we had to adjust rapidly to this work from home demand environment that kind of came on with the advent of COVID, as you might recall. And you may recall our washroom business, which is the majority of our business in KC Professional, tends to be higher, higher development in offices. And so that's really where the volume is gone. I would say right now that, on a category basis, that volume is running about 80 to 85% of what it was pre-pandemic, and it's not going to bounce back that quickly. And I'm not sure. I'm not sure you're in your office at Goldman in New York every day.

Speaker Change: And your channels private label share has been creeping up in some of your categories. Just wondering how are you thinking about brand and beckman with marketing versus promotion in order to maintain and grow market share. Thank you. Okay. Yeah. Great question. Anna core are core to our business I would say a couple of things first of all on market share I am confident.

Speaker Change: Our market share performance. This year is going to improve from last year.

Speaker Change: I was not happy with our performance on share last year for perspective on a weighted basis, which we use as an internal metric we don't talk about as much public we've been on a weighted basis.

Speaker Change: Globally about 40 bps, okay. So so not fallen off a cliff, but but not what we want so we want to be growing weighted share as well on a cohort basis, which was the one we usually talk to you all about.

Speaker Change: We're up in upper even in just under 40%. So thats below our goal of 50% or more of which I would say we were kind of jumping over that bar back in 2000 22021. So.

Speaker Change: And so, that's the same thing as we look around our offices; we're not fully back in, right? So that's, that's, I would say an ongoing challenge in that business. But, you know, I think our team has adjusted to that and treated it as a reality. We have right-sized some of the business, and some of it was from a cost perspective. The reality is we were doing a lot of volume and co-packing a lot of volume on the external market. And so I'd say we haven't had to address fixed costs as much as you might have thought of. And so, and I think that's reflected.

Speaker Change: So I think.

Speaker Change: We are we are where we are today, what we're going to build from here I would say a couple of things.

Speaker Change: All that said probably the biggest challenge has been for us in North America related to the supply constraints that I just talked about.

Speaker Change: I did want to know we've had strong gains and really really strong market positions in most of our largest markets just for reference in South Korea, which is our second largest business, we're up probably about 20 share points over the last five years.

Speaker Change: And then on Australia, and New Zealand were up somewhere between.

Speaker Change: <unk> 15 share points over the last five years.

Speaker Change: So I think the team has done a good job of recapturing margins from both a price perspective and a mixed perspective and also while growing volumes at the same time behind great innovations like our ICON dispenser, which I believe is really the best dispenser in that segment. Anyways, so I think the team's done a great job. And I think you can see that in the margin and, you know, definitely have recovered from pre-19 margins on that business and, actually. That's helpful.

Speaker Change: <unk> in the quarter, which is our <unk>.

Speaker Change: Fifth largest business.

Speaker Change: It was up over 300 bps on share just in the quarter. So we feel very good and one more on China I think we're approaching almost 300 300 bps again on huggies in the quarter. So I think we feel very good about our gains in our largest markets. The exception has been North America, where we have underperformed, but that is improving.

Speaker Change: A lot of that I think was just what I discussed what Jason we had some severe supply constraints.

Speaker Change: While we werent able to run our brand plans and the way that we wanted to run last year. We saw solid improvement in Q4, we were up or even in six of eight categories in sequentially improved in five of eight and so we feel pretty good about our trajectory.

Speaker Change: As I said, just a while ago our.

Speaker Change: Our commercial execution capability has never been better.

Speaker Change: And we're going to gain share by bringing the right innovation with our customers. We're excited about executing well and bring in sustainable cost advantage to our tour.

Speaker Change: To our business.

Speaker Change: You mentioned private label.

Speaker Change: On the note I would recognize that yes, we have seen an uptick in private label in the past quarter or two.

Speaker Change: I think if you look at the scanner data was I think it was upper even in seven of eight categories.

Speaker Change: Say on private label, we are very very committed to having superior.

Speaker Change: Our superior value proposition at every price tier that we're in.

Speaker Change: So versus 2019, if you look on a longer perspective private label is down a bit in the premium segment is up significantly.

Speaker Change: And even today the premium segment continues to grow so it is clear that the value tier has picked up a bit.

Speaker Change: You know, we have addressed those issues. I'd say our commercial execution is going to be stronger than ever. We're really past all these constraints that I talked about.

Speaker Change: And, you know, our consumption is moving in the right direction. Our share has moved in the right direction, fourth quarter as well. Got it. Good stuff. Thanks a lot.

Speaker Change: Our customers are very supportive of it.

Speaker Change: There are a couple of categories, where we have a little more value offering Scott.

Scott 1000 is a great value brand.

Speaker Change: I think it competes very very well and it's here and it's really really accepted by consumers and so again, we're cognizant that private labels kind of out there and that an uncertain or tough economic conditions value becomes much more important as consumer and we're committed to having a great value proposition in every tier.

Speaker Change: I'll pass it on and look forward to seeing you in March. Okay. Thanks, Jay Q. Your next question is coming from Anna Lazul from Bank of America. Your line is live.

Anna Lazul: Hi, good morning, and thank you for the question. I wanted to follow up on market share in light of your exposure to private labels and, in your track channels; private label share has been creeping up in some of your categories. Just wondering how you are thinking about brand investment with marketing versus promotions in order to maintain and grow market share? Thank you.

Speaker Change: Great very helpful. Thank you okay. Thanks Ana.

Speaker Change: Thank you. Your next question is coming from Steve powers from Deutsche Bank. Your line is live.

Steven Strycula: Hey, Thanks, guys good morning.

Speaker Change: Core to our business, I'd say a couple things. First of all, on market share. I'm confident that our market share performance this year is going to improve from last year. Definitely, I was not happy with our performance on share last year for perspective on a weighted basis, which we use as an internal metric. We don't talk about it as much publicly, but on a weighted basis. We are down globally by about 40 bps. Okay, so we are not falling off a cliff, but it is not what we want.

Steven Strycula: Yes.

Speaker Change: Yes, Echo that I guess, maybe could you provide just a little bit more color on the drivers there and maybe a little bit more specificity on how to think about.

Speaker Change: First first quarter trends relative to the balance of the year.

Speaker Change: So we want to be growing weighted shares well, on a cohort basis, which was the one we usually talk to you all about, you know, we're up in the upper even in just under 40%. So that's below our goal of 50% or more, of which, you know, I'd say we were kind of jumping over that bar back in 2020 or 2021. So, I think we are where we are today and what we're going to build from here. I'd say a couple of things.

Speaker Change: Sure, Steve So I'll start by.

Speaker Change: By reiterating that were very encouraged by how we finished 2023.

Speaker Change: The strong foundation for us to build from and a.

Speaker Change: A position in which volumes have stabilized and we had a quarter in which were flat volume and mix was another 100 basis points of growth.

Speaker Change: As we think about the cadence of the year.

Speaker Change: All that said, probably the biggest challenge has been for us in North America related to the supply constraints that I just talked about. But I did want to note that we've had strong gains and really, really strong market positions in most of our largest markets. Just for reference, in South Korea, which is our second largest business, you know, we're up probably about 20 share points over the last five years. And in Australia and New Zealand, we're up somewhere.

Speaker Change: Our first half second half balance of sales and earnings and our quarterly pacing is reflecting a combination of three things one our go to market plans.

Speaker Change: Two of our productivity initiatives and thirdly, the current shaping.

Speaker Change: Of currency headwinds that I talked about a little.

Speaker Change: A little while ago on organic sales growth.

Speaker Change: 10 and 15 SharePoints over the last five years. Andrex, in the quarter, which is our fifth largest business, was up over 300 bps on share just in the quarter. So we feel very good. And one more, on China, I think we're approaching almost 300 bps again on the Huggies in the quarter. So I think we feel very good about our gains in our largest markets. The exception has been North America, where we have underperformed, but that is improving. A lot of that, I think, was just what I discussed with Jason. We had some severe supply constraints.

Speaker Change: We see a relatively balanced across the year, but Q1 somewhat muted due to softer volumes in a sequential basis.

Speaker Change: We we have more programming coming into play as the year progresses, especially as Q2 kicks in and this includes incremental innovation that will be going into market at that stage. So we should see progressively an improvement in volumes and a mix led organic growth.

Speaker Change: Growth in margins following Q1.

Speaker Change: Other bid that again as we think about Q1 in terms of volumes.

Speaker Change: Well, we weren't able to run our brand plans in the way that we wanted to run last year, but we saw solid improvement in Q4. We were up or even in six of eight categories and sequentially improved in five of eight. And so we feel pretty good about our trajectory. As I said just a while ago, our commercial execution capability has never been better, and we're going to gain shares by, you know, bringing the right innovations which our customers are excited about, executing well, and bringing sustainable cost advantages to our business. You mentioned Private Label, you know, on the note. I would recognize that, yeah, we have seen an uptick in Private Label in the past quarter or two. I think if you look at the scanner data, I think it was up or even in seven of eight categories.

Speaker Change: We've built into the plan.

Speaker Change: Gradual improvement across the year.

Speaker Change: And in Q1, specifically, we are expecting another relatively flat volume quarter also because of the possibility that retail inventory softness pushes us slightly even below that level, but thats reflected in our outlook for the full year and we expect again volumes to pick up as the year progresses.

Speaker Change: Okay. Okay. Thank you for that.

Speaker Change: Yes.

Speaker Change: Kind of I guess stepping back a little bit there's been a lot of investment.

Speaker Change: That you've highlighted over the course of time and personal care not just the past year, but the past few years product quality marketing commercialization et cetera.

Speaker Change: You see the results.

Speaker Change: You know, I'd say on Private Label, we are very, very committed to having a superior value proposition at every price point that we are in. So, you know, versus 2019, if you look on a longer perspective, private labels are down a bit, and the premium segment is up significantly. And even today, the premium segment continues to grow. So it is clear that the value tier has picked up a bit, and our shares were impacted in the second and third quarters, although I would say more from our supply constraints than private label trading. I mean, we compete with private label.

Speaker Change: In.

Speaker Change: Relatively strong.

Speaker Change: Market share trends in organic growth I guess on the other side.

Speaker Change: Consumer tissue and KCP continue to.

Speaker Change: Yes laggan.

Speaker Change: Struggled from a volume perspective.

Speaker Change: I guess as you think about 24.

Speaker Change: Both the relative balance of investment.

Speaker Change: The relative balance of <unk>.

Speaker Change: Contribution to growth can you can you give us a little.

Speaker Change: Inside to how youre thinking about that and how we should think about.

Speaker Change: How those businesses are likely to trend.

Speaker Change: We're cognizant of that. You know, our approach, Anna, is to bring the right set of innovations, which we are accelerating and have been accelerating, and our customers are very supportive of it. There are a couple of categories where we have a little more value. Scott 1000 is a great value brand, but I think it competes very, very well in its tier and is really, really accepted by consumers.

Speaker Change: Yes.

Speaker Change: Relative to one another in the year.

Speaker Change: Yes, I'll just I'll make a couple of comments and then also maybe you can give some additional detail, but look I would say we are running our consumer tissue business, some might say externally a little differently.

Speaker Change: And so, again, we're cognizant that private label's kind of out there and that in uncertain or tough economic conditions, value becomes much more important to consumers, and we're committed to having a great value proposition. Great. Very helpful.

Speaker Change: To note I would say on a volume basis. If you look at North America for the quarter are organic and tissue was up three and the volume was up two.

Speaker Change: Very excited about the volume kind of resiliency in that business I think it reflects the essential nature of the category as you know.

Speaker Change: Thank you. Okay. Thanks, Anna.

Speaker Change: Thank you. Your next question is coming from Steve Powers from Deutsche Bank. Your line is live. Hey, thanks, guys. Good morning.

Speaker Change: Youre not moving away from from from the back category no matter what the condition is.

Steven Strycula: Hey, so maybe to start, you talked about a lower rate of organic growth in the first quarter and also, you know, a slightly back-weighted earnings profile for the year in the prepared remarks, and some of the comments this morning echo that. I guess, maybe you could provide just a little bit more color on the drivers there and maybe a little bit more specificity on how to think about first quarter trends relative to the balance of the year? Thanks.

Speaker Change: So we recognize we have an important kind of responsibility for consumers.

Speaker Change: But I think the thing that has changed.

Speaker Change: All time high ever was right and so our teams have done a phenomenal job I would say recovering.

Speaker Change: Sure, Steve, so I'll start by... Reiterating that we're very encouraged by how we finished 2023, you know, a strong foundation for us to build from and a position in which volumes have stabilized, and we had a quarter in which we flattened volumes and mixed with, you know, another 100 basis points of growth. As we think about the cadence of the year, our first half and second half balance of sales and earnings, and our quarterly placing is reflecting a combination of three things. One, our go-to-market plan, and our productivity initiative. And thirdly, you know, the current shape and design of CurrencyHeadwinds that I talked about a little while ago.

Speaker Change: Recovering the margins on that business that were necessary to keep that franchise healthy.

Speaker Change: Healthy going forward.

Speaker Change: A couple of other things that we've done to improve our ability to manage the business better is a better risk management tools to get us more stability from costs and hopefully you guys are seeing that we're not talking a lot about that but with Nelson coming in we saw change some of our practices with Tamara our chief supply officer coming in we've changed some of our supply chain.

Speaker Change: Practices and so we're trying to reduce the volatility of the input costs.

Speaker Change: I would say if you looked at the margin recovery. The biggest driver is really really disciplined application of we call internally revenue growth management tools.

Speaker Change: But if.

Speaker Change: If we had not made those investments over the past five years, we would not have been able to move at the pace. We moved over the last two years on revenue management.

Speaker Change: On organic sales growth, we see relatively balanced across the year, but Q1 somewhat muted due to softer volumes and a sequential. We have more programming coming into play as the year progresses, especially as Q2 kicks in, and this includes incremental innovation that will be going into the market at that stage. So we should see gradual improvement in volumes and mixed-lead organic growth and margins following Q1. The other bit is that, again, as we think about Q1 in terms of volume. You know, we've built into the plan a gradual improvement across the year. And in Q1, specifically, we're expecting another relatively flat volume quarter, also because of the possibility that retail inventory softness pushes us slightly even below that level.

Speaker Change: And then.

Speaker Change: Probably the most important thing going forward is the fact that we're driving value added innovation and we recognize as a consumer franchise. We have have a great offering a superior offering I mentioned in the UK and direct I think we hit about a 33 or 34 a share in the quarter.

Speaker Change: Our price gap has widened over the past three years, but our quality has improved significantly and we've invested in new technologies in our European tissue business.

Speaker Change: Allowing us to differentiate that product and so we feel good about our position on tissue. There are some pockets of challenge.

Markets can be very tough and so we're able to operate in those but we're really pleased with the kind of rapid recovery of margins and how our teams are managing that business right now.

Speaker Change: But that's reflected in our outlook for the full year, and we expect, again, volumes to pick up as the year progresses. Okay. Okay. Thank you for that.

Speaker Change: And I guess, you know, kind of, I guess, stepping back a little bit, there's been a lot of investment that you've highlighted over the course of time in personal care, not just the past year, but the past few years, product quality, marketing, commercialization, et cetera, and I think you see the results in, you know, relatively strong market share trends and organic growth. I guess on the other side, you know, consumer tissue and KCP continue to, you know, lag and, you know, struggle from a volume perspective. So, you know, as you think about 24 and both the relative balance of investment and the relative balance of contribution to growth, can you give us a little insight into how you're thinking about that and how we should think about how those businesses are likely to trend, you know, relative to one another in the Hey, yeah, I'll just make a couple comments, and then Nelson, maybe, can give some additional detail.

Speaker Change: That are allowing us to emerge much stronger.

Speaker Change: From this super cycle of inflation that we've seen specifically.

Speaker Change: Specifically for 2023.

Speaker Change: Our advertising budget overall increased to more than 5% of net sales, which represented roughly about 100 basis points of increase versus the prior year.

Speaker Change: And thats about $200 million in absolute terms.

Speaker Change: As you think about this year.

Speaker Change: Steve.

Steven Strycula: So that can give you a perspective of what we're seeing in terms of investments and overall spend in 2024 building on what we did in the past few years.

Speaker Change: Okay, great. Thanks, Thanks, a lot and I'll pass it on Okay, we could take.

Speaker Change: Maybe one more question that would be great.

Speaker Change: Certainly your next question is coming from Andrea Teixeira from Jpmorgan. Your line is live.

Andrea Teixeira: Thank you good morning.

Andrea Teixeira: Welcome Chris So can you I have one question.

Speaker Change: And then a clarification on your comments now.

Speaker Change: And the last question.

Speaker Change: First can you breakdown a bit the 'twenty 'twenty four guide by Division.

Speaker Change: Assuming you are still looking at like between to get to your number mid single digits for personal care.

Speaker Change: Some growth in volume there because thats, where you get most of the growth.

Speaker Change: And then tissue to be flattish customer customer T shirts would be flattish.

Or to grow low single and then professional has to be negative and especially in the first quarter as you lap those of those contract.

Speaker Change: Just wanted to ask is that historically for good reason, it's a better ROI.

Speaker Change: You're more dependent on personal care than the others. So and you have been to your point and to your benefit getting market share, particularly in the U S and China in diapers in Fem care. So I was wondering how you feel about the comps and how you feel about it.

Speaker Change: And so our teams have done a phenomenal job, I would say, recovering, you know, recovering the margins on the business that were necessary to keep that, you know, franchise healthy going forward. A couple other things that we've done to improve our ability to manage the business better are hey, better risk management tools, you know, to get us more stability from cost. And hopefully, you guys are seeing that. We're not talking a lot about it, but you know, with Nelson coming in, we've changed some of our practices. With Tamara, our chief supply officer, coming in, we've changed some of our supply chain practices, and we're trying to reduce the volatility of the input cost.

Speaker Change: Being able to meet this number in between low single mid single I mean at least at the high end of the guide. It does imply that you have as strong volume growth in personal care. So it wasn't one thing Ive a few and how you could decompose by division and then a clarification on the reinvestment you said announcing you mentioned 200.

Speaker Change: <unk> $200 million.

Speaker Change: Was the actual number roughly.

Speaker Change: And then this year would be about half of it and I was wondering what is the incremental updates more displays and shelf space promo what is going to be the main source because to be fair you've been to your point investing for a while now since Mike took over five years ago. Thank you Andre great great set of <unk>.

Speaker Change: Maybe I'll start with the bottom half first and then in muscle and keep kind of the comps some of the organic drivers.

The investment again, my priority would be focus on advertising.

Speaker Change: We get great returns on advertising both from.

Speaker Change: Certainly from a traditional TV and stuff, but more importantly, the digital and the returns are very very high and so our focus is there I mean, what we are going to be I would say competitive on the promotional front on it.

Speaker Change: You know, our price gap has widened over the past three years, but our quality has improved significantly, and we've invested in new technologies in our European tissue business that are allowing us to differentiate that product. And so we feel good about our position in tissue. There are some pockets of challenge. Some markets, you know, can be very tough.

Speaker Change: On a trade promotion front, but that said that's not how we're going to drive our business.

Speaker Change: We do feel like we get great value and we are break rate of both on things like huggies on U by Kotex.

Speaker Change: Across our business on Scott one.

Speaker Change: Last long.

Speaker Change: And so, we're able to operate in those. But, you know, we're really pleased with the kind of rapid recovery of margins and how our teams are managing. And just to build on what Mike was saying and address the investments. Over the last few years, as you would have seen, we've stepped it up both on advertising, support for our brands, and the capabilities that are allowing us to emerge much stronger from this super cycle of inflation that we've seen. Specifically, for 2023, our advertising budget overall increased to more than 5% of net sales, which represented roughly about 100 basis points of increase versus the prior And that's about 200 million in absolute terms.

Speaker Change: And so we've got great copy and we're going to invest there.

Speaker Change: Yes, so in terms of kind of the breakdown by by segment I mean, we expect personal care to be growing in the.

Speaker Change: And keep in mind that pricing will be around 200 basis points of that and that's largely related to.

Speaker Change: Currency related movements in Hyperinflationary economies. So that's kind of the breakdown on how you should be thinking.

Speaker Change: Of our segment growth next year.

Speaker Change: Thank you.

Speaker Change: Thank you that concludes our Q&A session I will now hand, the conference back to Chris <unk> for closing remarks. Please go ahead. Thanks.

Chris Jakubik: Thanks, everybody for joining us today for the analysts that have follow up questions, we'll be around all day and beyond that we're looking forward to seeing everybody in March.

Speaker Change: So that can give you a perspective of what we're seeing in terms of investments and overall spend in 2024, building on what we did in the past year. Okay, great. Thanks. Thanks a lot.

Speaker Change: Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.

Speaker Change: I'll pass it on. Okay. Certainly. Your next question is coming from Andrea Teixeira from J.P. Morgan. Your line is live. Thank you. Good morning.

Andrea Teixeira: And welcome, Chris. So can I have one question and clarification on your comments, now, so towards the end of the last question. First, can you break down a bit the 2024 guide by division? I'm assuming you're still looking at like between to get to your number meet single digits for personal care, some growth in volume there, because that's where you get most of the growth and then tissue to be flattish, consumer tissue to be flattish or to grow low single digits, and then professionals to be negative, especially in the first quarter as you lap The reason why I ask is that, historically, for a good reason, it's a better ROI, but you're more dependent on personal care than the others.

Andrea Teixeira: So, and to your point and to your benefit, getting market share, particularly in the U.S. and China for diapers and FemCare. So I was wondering how you feel about the competition and how you feel about being able to meet this number in between low single and mid single. I mean, at least at the high end of the guide, it does imply that you have strong volume growth in personal care. So I was wondering how you feel and how you could decompose by division. And then a clarification on the reinvestment you said, Nelson. You mentioned $200 million was the actual number roughly of the investment. And then this year would be about half of it.

Andrea Teixeira: And I was wondering what the incrementality is? It's more displays and shelf space, promotion. What is going to be the main source? Because, to be fair, you've been investing for a while now since Mike took over five years ago.

Speaker Change: Thank you. Yeah. Hey, Andrea, great set of questions. Maybe I'll start with the bottom half first, and then Nelson can kind of decompile some of the organic drivers.

Nelson: On the investment front, again, my priority would be focused on advertising. I think we get great returns on advertising, both from, certainly, traditional TV and stuff, but more importantly, digital. And the returns are very, very high. And so our focus is there. I mean, we are going to be, I would say, competitive on the promotion front, on the trade promotion front. But that's not how we're going to drive our business.

Nelson: You know, we do feel like we get great value and we have great creative both on things like Huggies, on You Buy Kotex, across our business on Scott 1000, which lasts a long time, you know, and so we've got great copy, and we're gonna invest there. Yes, so in terms of kind of the breakdown by by segment, I mean, we expect personal care to be growing in, you know, mid to high single So think of mid single digits overall and at the high end. And in the other two segments, we will be growing in the low single digits. And that kind of gets you to the algorithm that we provide. As I stated at the beginning, our plan is a vol-mix, largely let plan, and keep in mind that pricing will be around 200 basis points of that, and that's largely related to currency-related movements and hyperinflationary economies. So that's kind of the breakdown on how you should be thinking about Heart Segment Growth.

Nelson: Thank you. Thank you. That concludes our Q&A session. I will now hand the conference back to Chris Jakubik for closing remarks. Please go ahead. Thanks, everybody, for joining us today. For the analysts that have follow-up questions, we'll be around all day. And beyond that, we're looking forward to seeing everybody in March. Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.

Q4 2023 Kimberly Clark Corp Earnings Call

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