Kimberly-Clark 2008 Annual Report Download - page 40

PART II
(Continued)
In Europe, personal care net sales were even with the prior year as favorable currency effects offset
lower sales volumes and net selling prices. Sales volumes of Huggies diapers in the Corporation’s four
core markets—the U.K., France, Italy and Spain—declined about 4 percent from the prior year.
In the developing and emerging markets, net sales increased almost 17 percent driven by a more than 10
percent increase in sales volumes. The growth in sales volumes was broad-based, with particular
strength throughout Latin America and in South Korea, Russia, Turkey, and China. Increased net selling
prices and favorable product mix added about 4 percent and 2 percent, respectively, to the net sales
increase. Unfavorable currency effects in South Korea were offset by favorable effects in other
countries, primarily in Brazil and Israel.
• Consumer tissue net sales in North America were even with the prior year as increased net selling prices
of more than 6 percent and improved product mix of nearly 1 percent were offset by a sales volume
decline of about 7 percent. The higher net selling prices were primarily attributable to price increases for
bathroom tissue and paper towels implemented during the first and third quarters in the U.S. List prices
for facial tissue were raised late in the third quarter. Sales volumes were down mid-single digits in
bathroom tissue and facial tissue and double-digits in paper towels, primarily as a result of the
Corporation’s focus on improving revenue realization. A portion of the overall volume decline is also
due to the Corporation’s decision in late 2007 to shed certain low-margin private label business.
In Europe, consumer tissue net sales increased almost 4 percent on nearly 3 percent higher net selling
prices, a 1 percent improvement in product mix and more than 2 percent favorable currency effects,
tempered by a decline in sales volumes of about 2 percent. The lower sales volumes were primarily due
to reduced sales of Andrex and Scottex bathroom tissue and Kleenex facial tissue in response to higher
net selling prices and a slowdown in category sales, particularly in the U.K.
Consumer tissue net sales in the developing and emerging markets increased nearly 13 percent. During
2008, the Corporation raised prices in most markets to recover higher raw materials costs and drove
improvements in mix with more differentiated, value-added products, strategies that resulted in higher
net selling prices of about 10 percent and better product mix of more than 2 percent. Sales volumes were
even with last year. For the year, currency effects were neutral as favorable effects earlier in the year
were offset by the dramatic changes in currency rates in the fourth quarter of 2008.
• Economic weakness and rising unemployment levels in North America and Europe began to affect K-C
Professional’s categories in the fourth quarter of 2008. For the year, net sales in North America
increased nearly 3 percent as increased net selling prices of about 4 percent and improved product mix
of over 1 percent were tempered by lower sales volumes. In Europe, net sales of KCP products
advanced about 9 percent as increased net selling prices and higher sales volumes contributed nearly 3
percent and 2 percent, respectively, to the improvement. Currency effects were about 4 percent
favorable versus the prior year.
• The increased sales volumes for health care products were primarily due to mid-single digit growth
outside North America and a similar advance for medical devices in North America. The price decline
was mainly attributable to competitive conditions affecting surgical supplies in North America and
Europe.
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