Kimberly-Clark 2007 Annual Report Download - page 25

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PART I
(Continued)
The Corporation’s manufacturing operations utilize electricity, natural gas and petroleum-based fuels.
To ensure that it uses all forms of energy cost-effectively, the Corporation maintains ongoing energy
efficiency improvement programs at all of its manufacturing sites. The Corporation’s contracts with energy
suppliers vary as to price, payment terms, quantities and duration. The Corporation’s energy costs are also
affected by various market factors including the availability of supplies of particular forms of energy, energy
prices and local and national regulatory decisions. There can be no assurance that the Corporation will be fully
protected against substantial changes in the price or availability of energy sources. Derivative instruments are
used to hedge a substantial portion of natural gas price risk in accordance with the Corporation’s risk
management policy.
Increased pricing pressure and intense competition for sales of the Corporation’s products could have an
adverse effect on the Corporation’s financial results.
The Corporation competes in intensely competitive markets against well-known, branded products and
private label products both domestically and internationally. Inherent risks in the Corporation’s competitive
strategy include uncertainties concerning trade and consumer acceptance, the effects of consolidation within
retailer and distribution channels, and competitive reaction. Some of the Corporation’s major competitors have
undergone consolidation, which could result in increased competition and alter the dynamics of the industry.
Such consolidation may give competitors greater financial resources and greater market penetration and enable
competitors to offer a wider variety of products and services at more competitive prices, which could adversely
affect the Corporation’s financial results. It may be necessary for the Corporation to lower prices on its products
and increase spending on advertising and promotions, each of which could adversely affect the Corporation’s
financial results. In addition, the Corporation incurs substantial development and marketing costs in introducing
new and improved products and technologies. The introduction of a new consumer product (whether improved or
newly developed) usually requires substantial expenditures for advertising and marketing to gain recognition in
the marketplace. If a product gains consumer acceptance, it normally requires continued advertising and
promotional support to maintain its relative market position. Some of the Corporation’s competitors are larger
and have greater financial resources than the Corporation. These competitors may be able to spend more
aggressively on advertising and promotional activities, introduce competing products more quickly and respond
more effectively to changing business and economic conditions than the Corporation can. The Corporation’s
ability to develop new products is affected by whether it can develop and fund technological innovations, receive
and maintain necessary patent and trademark protection and successfully anticipate consumer needs and
preferences.
There is no guarantee that the Corporation will be successful in developing new and improved products and
technologies necessary to compete successfully in the industry or that the Corporation will be successful in
advertising, marketing and selling its products.
Changes in the policies of our retail trade customers and increasing dependence on key retailers in developed
markets may adversely affect our business.
The Corporation’s products are sold in a highly competitive global marketplace, which is experiencing
increased concentration and the growing presence of large-format retailers and discounters. With the
consolidation of retail trade, especially in developed markets such as the U.S. and Europe, the Corporation is
increasingly dependent on key retailers, and some of these retailers, including large-format retailers, may have
greater bargaining power than does the Corporation. They may use this leverage to demand higher trade
discounts or allowances which could lead to reduced profitability. The Corporation may also be negatively
affected by changes in the policies of its retail trade customers, such as inventory de-stocking, limitations on
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