The operator welcomes everyone to Kimberly-Clark's Second Quarter 2024 Earnings Question-and-Answer Session and hands the conference over to Chris Jakubik, Vice President of Investor Relations. Chris discusses forward-looking statements and non-GAAP financial measures, reminding listeners to refer to the earnings release and SEC filings for more information. CEO Mike Hsu thanks his colleagues for their hard work and discusses the company's strong results and plans for future growth through innovation. He expresses pride in the company's progress so far.

The speaker discusses the company's positive market share trends and growth in organic sales. They mention that they expect further improvement in market share as they continue to focus on their core strengths. In North America, they have seen improvement in market share after facing supply constraints last year. The speaker anticipates this trend to continue in the coming quarters.

The company has seen solid gains in market share in certain brands in their focus markets outside of North America, such as China, the UK, South Korea, and Brazil. However, they are still flat on a weighted basis and need to continue working to improve their brand proposition. The company expects to see growth in these markets as they implement their proven playbook and launch new technology, such as their skin essentials line in the US.

The company has been investing in building commercial and supply capabilities to improve performance in their focus markets. Despite dynamic local conditions, there is room for improvement in brand propositions in markets like China, Brazil, and South Korea. The strong start to the year will allow for strategic investments to improve their product offerings in these markets. In the second quarter, the company had a significant margin and EPS beat, but investments are expected to increase in the second half of the year. The divestiture impact will also ramp up in the back half of the year, and the company expects margins and EPS to reflect this.

The company is proud of their teams' performance in the first half of the year and have gained momentum in various areas. They are focused on driving profit dollar growth margins and have seen positive volume mix growth in key markets. They have already achieved more than half of their profit objectives for the year and have flexibility to invest in strengthening their brands and innovation pipeline. In the second half, they expect similar growth to the second quarter, with volume and mix being the key drivers. They also anticipate lower productivity delivery in the second half but still strong overall for the year.

In the second half of the year, the company expects pricing net of costs to taper off, but overall, they expect to be at least pricing neutral for the full year. They also plan to increase investments behind their brands, with a spend of approximately 7% of sales. The divestiture of their personal protective equipment will be a headwind for profits in the second half. Additionally, the growth in equity method investment income in the first half was due to the strength of the Mexican peso, which is expected to revert in the second half. The adjusted effective tax rate for the full year is projected to be 23% to 24%.

The speaker discusses the company's first half adjusted effective tax rate of 22.3% and gives a detailed explanation of the factors that will affect the company's performance in the second half of the year. They also mention the stable pricing environment in North America and the company's focus on volume and mix-driven growth. The company is also maintaining pricing discipline to offset cost inflation and is working to maintain strong value propositions across all segments of the market.

The company is focused on building brands through advertising, but recognizes the importance of promotions in certain categories. There will be organizational changes in a few months, which have already started with some shifts in reporting. The company has recently hired a new Chief Growth Officer and head of R&D, and their backgrounds will align with the company's new strategy.

The speaker discusses their previous experience with corporate transitions and how it has helped with the current organizational change. They express excitement about the progress being made and appreciate the hard work of the teams. They also mention the upcoming transition of leaders and their qualifications.

The speaker is asking for more information on the company's savings plan, specifically in regards to the announcement of exiting two small markets. The CEO explains that the decision was made in order to make the company more robust and profitable in the long-term. The CFO then elaborates on the sources of the savings, which mainly come from the supply chain transformation strategy.

In the second quarter, our focus is on optimizing our network, which includes our physical locations and implementing scalable automation processes. We are pleased with our progress so far and have already seen $255 million in supply chain productivity savings. This is due to conversion and waste reduction, product material standardization, and cost reductions in transportation and warehousing. Additionally, we are targeting $200 million in overhead savings over the next few years, with the majority of those savings coming into effect later this year.

The speaker is discussing the company's financial results and the discipline they have in place for spending and costs. They mention seeing flat sequential dollars and a focus on driving discipline. The listener asks about recent scanner data showing an acceleration in volume, and the speaker responds that they focus more on consumption numbers and are encouraged by the progress in volume and mix. They also mention some noise in North America due to inventory changes and comping a soft quarter last year.

The company saw stronger tissue consumption than organic, which suggests that there was a decrease in tissue inventory. The volume trends were encouraging overall, with resilience in demand across categories globally. There is an expectation of additional cost inflation in the second half of the year, and the company is focused on balancing pricing and investing in innovation to offset this. In North America, demand remains resilient, with categories seeing mid-single-digit growth and positive volume. This reflects the essential nature of the company's products.

The company is monitoring consumer health and has noticed insensitivity in some categories among mid to lower income households. They have a strong offering across the value spectrum and are working with customers to better serve consumers. In terms of volume and inflation, they expect the back half to be volume mix driven and pricing to subside. They aim to hold a pricing net of cost neutral standard and expect to be at least neutral, if not positive, on the year. There has been strong and favorable pricing in the first half of the year due to timing of pricing realization and cost inflation, but they do not expect a material change in overall cost inflation.

In response to a question about North American tissue sales, Mike Hsu from JPMorgan discusses the impact of retail destocking and the company's performance in the category. He mentions that overall consumption was up, with Kleenex showing strong progress in terms of market share. However, there were challenges with bad tissue due to packaging changes and supply constraints. This led to a decrease in market share for Scott 1000 and increased promotion of private label products.

The speaker discusses the health of the company's brand and the progress made in the quarter. They mention that Personal Care grew mid-single digits in North America, driven by volume and mix. They also address the impact of trade destocking on Consumer Tissue in North America and express confidence in the start of the year. The speaker mentions some inventory changes and supply constraints, but overall feels good about the brand and acknowledges that there is still work to be done.

In the paragraph, the speaker discusses the company's plans for investing in their value propositions and growing their categories through advertising and innovation. They also mention the recent launch of Skin Essentials in North America. In response to a question about their tissue business, the speaker mentions an increase in promos and a possible negative price contribution, but focuses more on consumption trends and working closely with customers to plan for inventory.

The speaker discusses their company's current inventory positions and the unpredictable future, as well as the increased consumer price sensitivity in the promotional environment. They mention the use of analytics and predictive modeling tools to make the right choices on promotions. They emphasize a focus on profitable growth and using promotions as a tool, rather than a strategy. They also mention their expectation for positive volumes in all businesses, including North America tissue.

The operator thanks everyone for participating in the event and announces that it is now over. Participants can disconnect and are wished a wonderful day.

This summary was generated with AI and may contain some inaccuracies.