Tuesday, August 18, 2015

Kimberly Clark squeezes profit and sale rises

Kimberly Clark chose to have a smaller margin growth in Brazil to keep the increase in volumes and increase market share this year. The American multinational made price adjustments equivalent to half of inflation, or 3%, in the first half. Investments in renovation of the portfolio and higher costs for the purchase of raw materials were compensated in part with efficiency programmes in factories, according to the Colombian Sergio Cruz, President of the Brazilian unit since January 2014. The company keeps the focus on more sophisticated products. "When this economic cycle through, consumers will reward the brands in that trust," he says.
The Brazil is the third largest operation of Kimberly Clark in the world. From January to July, sales rose by 8% in volume and 13% in net revenue, even in a context of high inflation, weak demand and rising costs. Operating profits grew 23 percent in the first half. "Luckily for us, we are in a category of commodities, more resistant. There is nervousness and the consumer would rather spend their money better, take it slower at stores, but the Brazilian economy is strong, "says Cruz. This way, the company is a leader in categories like toilet paper (snow), tissues (Kleenex) and tampons (Intimus).
"The secret is to have a consistent innovation plan, to improve the products year after year", adds the Executive. The company has intensified the renewal of the portfolio to increase the quality of affordable brands and grow with cost-effective products, more demanded by the consumer. The strategy is similar to Hypermarcas, diaper manufacturer PomPom and glaze Risqué, whose consumer division grew 15% from April to June 2015, about a year before.
In Kimberly, an example of this tactic was the resumption this year of diaper Huggies Supreme Care. Now, the model has two additional velcros for better fixing, replacing elastic waist. The change reduced the cost of production and, according to the company, this economy was passed on to the price.
Children's diapers on the market, the company was the first to enter the segment of "diaper-clothes", easier to wear than the conventional, in 2012. To realize the good receptivity of the product, has also developed a cheaper version, Easy vest in 2013. Still, the package has a price greater than the conventional model. Many mothers make the combined use of the two types, with a cheaper diaper during the day and a more expensive at night to take more hours without leakage.
Until last year, Kimberly was the second largest in the diaper market in Brazil, after Procter & Gamble, which owns Pampers brand, according to data from Euromonitor for 2014. Cruz says this year has surpassed the competition. "For the first time we are leaders in baby diapers in Brazil, in value and volume," he says. There was still a market gain in other categories. "Intimus, which was absorbing external leader, won first place in tampon", he adds. "The company grew strong in banks until 2014. This year, we invested in the quality of the products, but don't pass on the costs. Sacrifice margin growth to keep the volumes. "
Kimberly confirms that was invited to examine the Division of diapers Hypermarcas, put up for sale in may, but no comments on the progress of the negotiations.
Present in Brazil since 1996, the company has five factories, five distribution centers and 4.3 thousand direct employees. The growth projection for 2015 is 15%, with net revenues of r $ 4 billion.
The marketing budget in Brazil is being redistributed between various channels. The company continues to invest in cable, but expanded the digital communication, cheapest and easiest audience segmentation. The company adapted the strategy to the moment of rationality. "We are seeing a fall in the growth of the categories in which we compete, such as diapers and baby products. The average ticket fell and consumers seeking best value brands or better cost-benefit ratio, "says the President.
The multinational operates in more than 175 countries. Global operations had net revenue of $ 4.6 billion in the three months to June, down 6%. The currency conversion reduced sales by 10% over the period.
Valor Economico
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