Kimberly-Clark
Corporation (KMB)
December 4, 2007
Gloria Ho, Jonathan Li, Jason Mueller, Patricia Shongedza
Investment Managers
Gloria Ho
gho2@uiuc.edu
Jason Mueller
jcmuell1@uiuc.edu
Jonathan Li
jxli2@uiuc.edu
Patricia Shongedza
pshonge2@uiuc.edu
2
Presentation Outline
Company Overview
 Business segments
 Risk assessment
 Competitor analysis
 DCF Analysis
 Recommendation

3
Company Overview

Global health and hygiene company
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Personal Products industry
Products made from natural or synthetic fibers
Advanced technologies in fibers, nonwovens, and absorbency.
Founded in 1872 & headquartered in Dallas, TX
Consumers in more than 150 countries worldwide
Manufacturing facilities in 40 countries
More than 55,000 employees
FY2006 Total Revenues of $16.75B; Market cap: $29.5B
More than 1.3 billion people (1/4 of the world’s population)
trust K-C brands EVERYDAY.
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Consumer Brands
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Business Segments: Brands
Personal Care
Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays,
Depend, Poise
Consumer Tissue
Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Hakle, Page
K-C Professional & Other
Kimberly-Clark, Kleenex, Scott, WypAll, Kimtech, Kleenguard,
Kimcare
Health Care
Kimberly-Clark, Ballard
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Business Segments: Products
Personal Care
 Disposable diapers, training and
youth pants, and swim pants
 Baby wipes
 Feminine and incontinence care
products
Consumer Tissue
Facial & bathroom tissue
 Paper towels
 Napkins
K-C Professional & Other
Facial & bathroom tissue
 Paper towels
 Napkins
 Wipers
 Various safety products
Healthcare
 Surgical gowns
 Drapes
 Infection control products
 Sterilization wrap
 Disposable face masks and
exam gloves
 Respiratory products
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Revenues by Segment
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Revenues by Region
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Net sales grew 14% in the developing and emerging markets, with
each of the regions contributing to the increase.
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Innovation
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K-C invented five of their eight major
consumer product categories:
 facial
tissue, paper towels, toilet paper on a
roll, feminine pads and disposable training
pants
Primary raw material:
fiber recycled from recovered waste paper
 Polypropylene and other synthetics
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Presentation Outline
Company Overview
 Business Segments
 Risk Assessment
 Competitor Analysis
 DCF Analysis
 Recommendation

11
Risk Assessment
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Significant increases in costs
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Foreign market risk
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Heavy price competition
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High failure risk for new products
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Risks: Input Costs
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Pulp, polypropylene, and synthetic polymers
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Direct input to 25% of total revenue.
Cost increase for 2007 more than 120% greater than originally
forecast.
Result: 4-7% increase in prices for tissue paper, diapers.
Costs partially offset by increased volume, outsourcing.
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Risks: Price Competition
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Highly competitive segments
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Low cost substitutes, private/generic labels for virtually all
consumer products.
Questionable customer loyalty: Brand loyalty vs. Brand
repertoire.
The Wal-Mart Effect
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13% of total firm-wide revenues
Mitigating Factors
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Leverage customer knowledge and increase responsiveness.
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Ex: Packaging alternatives for diapers
Leverage global R&D to make products more adaptive to local
markets
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Risk Factors Cont’d
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Foreign Markets
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Rapid investment in BRICIT could lead to overcapacity.
Political and socioeconomic volatility in emerging markets.
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Success highly contingent on ability to form partnerships.
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Latin America, Eastern Europe.
Adapting to cultural differences, building distribution networks, etc.
Intellectual property protection.
New Product Acceptance
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High initial marketing costs
High market saturation of existing products: difficulties in
continuing innovation
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Presentation Outline
Company Overview
 Business Segments
 Risk Assessment
 Competitor Analysis
 DCF Analysis
 Recommendation

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Competitors
Vary in size and function
 Competes against well known branded
products therefore faces risk in consumer
acceptance
 Principle areas of competition include
brand loyalty, product quality and
innovation, price and marketing strategies
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Competitors
KMB
Georgia Pacific
Playtex
Products
PG
Market Cap
29.44B
NA
NA
228.33B
Employees
55,000
50,000
1,250
138,000
Revenue
17.82B
2.15B
636.20M
77.89B
Net Income
1.85B
623M
30.20M
10.56B
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1 year chart (competitors)
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Porters five forces
Threat of new entrants; LOW
 Bargaining power of suppliers; LOW
 Bargaining power of buyers; MODERATE
 Threat of substitutes; HIGH
 Industry rivalry; HIGH
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RCMP Position

Purchased 300 shares on April 20, 2005 at
$63.91/share
 Total
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investment: $19,173
Current market price: $69.81

Unrealized gain of $1,770.00 (9.23%)
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Position in the portfolio
MV % of Portfolio
4.92%
Cash
4.82%
AEE
AEO
6.24%
CPRT
5.53%
41.53%
2.80%
DFS
FR
JKHY
KMB
MVSN
9.74%
SRCL
SRZ
6.87%
9.11%
5.64%
WAG
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Correlation Matrix
AEE
AEO
CPRT
FR
JKHY
MVSN
SRCL
SRZ
WAG
DFS
AEE
1.00
-0.03
0.38
0.30
0.22
0.16
-0.13
0.11
0.06
0.31
KMB
0.36
AEO
CPRT
FR
JKHY
1.00
0.20
-0.03
0.38
0.41
0.11
0.21
0.13
0.28
1.00
0.28
0.40
0.32
-0.02
0.41
0.08
0.10
1.00
0.12
0.21
-0.06
0.18
-0.15
-0.02
1.00
0.55
0.08
0.38
-0.02
0.40
0.10
0.48
0.08
0.31
MVSN
1.00
-0.12
0.46
-0.05
0.80
SRCL
SRZ
1.00
0.04
0.09
-0.55
1.00
-0.17
-0.61
0.03 -0.01
0.00
WAG
1.00
-0.11
DFS
1.00
0.24 -0.18
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Recent News
Kimberly-Clark Declares Dividend
Kimberly-Clark Declares Regular Quarterly Dividend of 53 Cents/Share
• Dividend increased 9% in 2006, and expected to increase 8% in
2007
November 15, 2007: 06:27 PM EST
Ahead of the Bell: Kimberly Clark
Analyst Upgrades Kimberly-Clark, Says 2005 Restructuring Program
Paying Off with potential increased revenue coming from BRIC
emerging markets
November 26, 2007: 09:11 AM EST
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Presentation Outline
Company Overview
 Business Segments
 Risk Assessment
 Competitor Analysis
 DCF Analysis
 Recommendation

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DCF Analysis

WACC calculation
 Beta:
 WD :
 WE:
 KD:
 KE:
 Tax
rate:
1.3 (Google Finance: 0.71)
7.18%
92.82%
Weighted avg. interest rate
Cal. from CAPM
36.7% (effective tax rate)
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DCF Analysis
Key assumptions:
 Sales Growth Rate (2007-08):
 Sales Growth Rate (2009-12):
 Cost of product to Sales:
 Terminal Growth Rate:
 Dividend Growth:
4.8%
2.0%
66.9%
3.0%
8%
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DCF Analysis
Key Assumptions
2007
2008
2009
2010
2011
2012
Marketing,
research and
general
expenses
2,991
3,134
3,197
3,260
3,326
3,392
Depreciation
and
amortisation
880
991
1,104
1,220
1,338
1,458
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DCF Analysis

Based on DCF Share Price: $73.49
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Presentation Outline
Company Overview
 Business Segments
 Risk Assessment
 Competitor Analysis
 DCF Analysis
 Recommendation

30
Recommendation
Based on DCF Share Price: $73.49
 Current Share Price: $69.56 (3 Dec 07
closing)
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HOLD
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