Kimberly-Clark CorporationKMB is focusing on business growth across key markets through brand investments and other strategic endeavors. Per market hearsay, the company plans to invest in the Oklahoma mill to expand capacity. Per sources, the development project is likely to be completed in 2020. Let's take a closer look at how such moves are likely to aid this renowned personal care products company.
Efforts to Enhance Brand Strength
The Oklahoma mill is engaged in the manufacturing of Scott and Cottonelle toilet papers as well as other personal care products. Also, the facility consists of a regional distribution center. The rumored plans of expanding the mill is likely to add greater floor space and enable installation of new resources for manufacturing Scott bath tissue as well as products under the Kleenex folded tissue banner.
We expect that the investment plan, if carried out, will boost Kimberly-Clark's consumer tissue category. Notably, the company focuses on growth of its segments through product development and strengthening of supply chain. In fact, it is keen on innovation and upgrades for products such as tissues, diapers as well as baby wipes.
Kimberly-Clark Corporation Price and Consensus
Will Efforts Help Overcome Hurdles?
Kimberly-Clark, which is part of the Consumer Products-Staples industry, has been grappling with high input costs for a while now. Markedly, greater costs of pulp and other raw materials are weighing on profitability. Further, management expects input cost inflation for 2019 in the range of $300-$400 million. Additionally, unfavorable currency movements are a drag. For 2019, commodities and adverse currency rates are likely to impair operating profits by nearly 20%.
Nevertheless, we expect this Zacks Rank #3 (Hold) company to cushion the aforementioned challenges, through strategic endeavors that boost brand sales and enhance efficiency. In fact, as part of the Global Restructuring Program, the company plans to exit certain low-margin businesses and concentrate on other prospective areas. Moreover, the company has plans to drive savings through Global Restructuring & FORCE Programs. To top these, the company is on track with strengthening e-commerce platform as well as leveraging capabilities in marketing and sales. Such well-chalked growth plans have boosted investors' optimism on the stock that gained nearly 3.8% in the past three months compared with S&P 500's increase of 2.8%.
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