Kimberly-Clark Corp (KMB) — Q1 2022 Earnings Call Transcript

Thank you, and good morning, everyone. Welcome to Kimberly-Clark's First Quarter Earnings Conference Call. With me today are Mike Hsu, our Chairman and CEO; Maria Henry, our CFO; and Nelson Urdaneta, our incoming CFO. Earlier this morning, we issued our earnings news release and published prepared management remarks from Mike and Maria that summarize our first quarter results and 2022 outlook. Both documents are available in the Investors section of our website. In just a moment, Mike will share opening comments, and then we'll take your questions. During this call, we may make forward-looking statements. Please see the Risk Factors section of our latest Annual Report on Form 10-K and the first quarter 10-Q for further discussion of forward-looking statements. We may also refer to adjusted results and outlook. Both exclude certain items described in this morning's news release. The release has further information about these adjustments and reconciliations to comparable GAAP financial measures. Now, I'll turn it over to Mike.

Okay. Thank you, Taryn. Good morning, everyone. Before we get to your questions, I'd like to comment on our CFO transition and then I'll provide a perspective on our Q1 results. First, I'd like to thank Maria Henry for seven years of outstanding leadership as CFO of Kimberly-Clark. As you saw from our news release, Maria has decided to retire effective September 1. Maria will leave quite a legacy at K-C. She played a key role in the design and execution of our strategy, and our strong financial stewardship has positioned us well for the future. I'm grateful for all her contributions and very glad she'll be with us through the summer to ensure a smooth transition. I'd also like to welcome Nelson, our incoming CFO. Nelson brings strong operational and international experience to K-C, and I'm looking forward to his leadership. I'm sure you'll enjoy getting to know him as he begins his new role. Now turning to our first quarter. I'm pleased that we started the year with double-digit organic sales growth and strong performance in all segments. Our teams are executing very well during a period of continued volatility and high inflation. Our strong fundamentals provide a solid basis for us to raise our sales outlook for the full year. We're driving growth by building strong commercial capabilities and deploying them with local agility. We're continuing to invest in our business, grow our categories, and deliver meaningful value to our consumers. We're continuing to face a dynamic environment. We're being thoughtful with actions to offset macro headwinds, balancing price, volume, and market share while we work to improve our margins over time. 2022 marked K-C's 150th anniversary. Kimberly-Clark was founded on the core principles of quality, service, and fair dealing. These principles still reflect who we are and what we stand for today. We're led by our purpose of better care for a better world and we're driven to perform, so we can continue to make a difference in people's lives with the categories we create, the products we make, and the consumers we serve. Our purpose-led, performance-driven culture fuels our team every day to drive our growth and deliver long-term shareholder value. Now with that, we'd like to address your questions.

Thanks. Good morning everyone. Maria, congratulations once again, and best wishes. Nelson, we are excited to collaborate with you. I wanted to begin with guidance. I have a few tactical questions first; then, Mike, let's start with a more strategic one. Given the uncertainty and rising concerns about consumers and their ability to manage higher inflation, are you noticing anything in your markets that makes you hesitant to implement further price increases? Are you worried about any trade downs that might make you cautious about raising your organic sales growth outlook? I also have a couple of follow-up questions for Maria. Thanks.

No. Well, Kevin, thanks for the question. There have been two significant changes since our January update. First, if you look at our quarterly results, our price realization is effective right now, and the volume is performing better than we initially expected. However, as you saw in our release, inflation has worsened significantly. I would say these two changes largely offset each other. I believe our strong top line reflects the essential nature of our categories and the strength of our brands. We have been working over the last several years to improve our brand fundamentals through strong innovation and effective commercial execution. As I mentioned earlier, we are proud of our local agility. Overall, I would say we are cautiously optimistic. We do recognize that the prices we are putting into the market will cause some stress for consumers. Therefore, we will be very thoughtful about balancing growth, margin, and share. We will also be responsive and agile to the needs of the marketplace. At this moment, I would say the pricing environment has been largely constructive, and I think we are on track with our pricing expectations.

Got it. Thanks Mike. Just to clarify, is the expectation that the increased pricing will mainly counterbalance the additional cost pressures? Are you currently at a lower point in your earnings guidance where the extra input costs you're dealing with won't be fully offset?

Yeah. Well, just as a principle, I would say, generally, I would expect our teams to offset input cost inflation with pricing over time. It may not occur within the year, but over time. And so that's our general principle. Obviously, we'll also deploy cost savings and productivity against that problem as well. But again, that's our overall principle. We have taken further action. We announced a suite of actions at the beginning of the year. And then we've taken further actions since we talked last January. And again, I think our teams have been very responsive to what's happening in the marketplace.

Okay. I’ll pass it on and hop back in the queue. Thank you very much for the time.

Thanks Kevin.

Good morning Lauren.

Thanks. Good morning. One of the things that stood out in the results was the mix and how it continues to contribute to our top line. I assume this is related to your mentioned execution. As you consider how commercial execution might evolve from here, I'm curious about the merchandising on the shelf and what aspects of your product range are being highlighted in stores versus others to support volume as we progress through the year. How do you anticipate the mix will change as inflationary pressures increase on consumers? Thank you.

Yes. Thanks, Lauren. Yes, we're very encouraged with the mix performance. And again, I think it dovetails or it's an outcome of our underlying strategy, which is to elevate our categories and expand our markets. And I think you might observe, we've been driving mix for a few years now. And the core underlying thought is, we still think there is a lot of opportunity for premiumization in our categories. Recognize that I think the circumstances of this environment may require some slight adjustments. But the long-term opportunity, I think, Alison talked about at the CAGNY conference. China, which is the largest hypermarket in the world right now, still remains the largest market. The value per baby is less than half of what it is in developed markets like the United States. And so, we still think premiumization is an opportunity. That's what's driving our growth. We were up high single digits in China for another quarter. We continue to grow there and continue to improve mix. And so, that's a core idea for us. It's also what's driving our momentum in North America, double-digit growth in diapers and across personal care, all personal care categories in the US. We're continuing to drive innovation on the premium end, but also, we brought a lot of improvements to our value tiers as well in North America and around the rest of the world. So, again, we're elevating our categories. It remains a core part of the strategy. We're not going to be niche premium though, and so we want to be able to serve all consumers. And so, we're balancing our investments and our investments in innovation across the value tiers.

Okay, great. Thank you so much. Really appreciate it, and I'll get back in the queue later.

All right. Thanks, Lauren.

Good morning, Chris.

Hey, good morning. I just wanted to follow up on the question around pricing, your expectations, and how things have evolved. So the 4% to 6% organic sales growth now includes volumes, which are negative, which was the call before; implies pricing, probably at least a couple of hundred basis points higher than where you were before. I'm seeing pricing in the US right now in the high single-digit range. So can you perhaps help us understand how much pricing you're expecting and how that has changed relative to prior expectations? And maybe give us a sense of pricing expectations in the US versus internationally? Like, for example, is international pricing going to be as strong as the US? And then, just connected to that, on Kevin's question around elasticities, I did notice in the prepared remarks some comments around pricing impacting volume in some D&E markets. I think previously, elasticities were a bit more conceptual. And I'm just wondering if now you're actually starting to see some of that volume impact play out?

Certainly. Chris, I'll begin, and then Maria can add more details. Overall, our pricing execution is on track. Volumes have been solid and are trending better than we initially expected. However, as I noted before, we will closely monitor our price gaps. We have executed multiple rounds of pricing, and given the developments in the first quarter, the additional pricing is a significant reason for our updated sales outlook. In the marketplace, trade discussions have been productive, and we've observed shifts in other brands and, in some cases, private labels. However, there is some resistance in specific markets, particularly in Western Europe and parts of Latin America. Therefore, we will keep a close eye on the situation, aiming to balance our performance and growth with our market share. Overall, we are confident in our pricing strategy, our portfolio, and our ability to cater to consumers across both value and premium segments.

Yeah. And I would just add that if you look at the outlook for input costs, which did escalate and our outlook for the year, as you know from our prepared comments and news release, we did increase the number in terms of the inflation we expect for the year. A good portion of that comes outside of the United States. And so along with the intent to cover inflation with pricing, you should expect that a lot of the incremental pricing we're putting into the market comes outside of the US.

And if I could just ask one follow-up there on the incremental inflation that you're seeing. What are the specific baskets or cost items that are moving outside of the US to cause this incremental pricing? Thanks so much.

Sure. At the midpoint of our new guidance versus where we were in January, we're up about $375 million in terms of our expectation for input cost inflation this year. That increase is across all of our baskets. But as you know, with the significant volatility in oil and energy, that is clearly one of the drivers. That's well over half of the increase that we're seeing since January and the impact particularly on the energy side rates to Western Europe and UK. And there, we have a sizable tissue business, which is a large consumer of energy. So that is kind of how the inflation basket plays out and why it's more weighted to markets outside of the US.

Okay. Thanks so much.

Thanks Chris.

Morning Steve.

Good morning, and congratulations to Maria, and welcome to Nelson from my side. Regarding the $375 million guidance, the incremental $375 million at the midpoint due to higher inflation appears to be significantly higher in quantitative terms than the increase in revenue you are projecting. The components of your guidance suggest a net negative impact. You've also maintained the full year range, so I'm trying to understand if there have been any improvements in your outlook compared to the beginning of the year, or if we are now considering the lower end of the range rather than the higher end previously. Any clarification on this would be appreciated.

Sure. There is clearly a range and coming into the year, we discussed the factors that could influence where we end up within that range, and commodity inflation expectations have clearly risen. We mentioned incremental pricing considerations. We will have to see how all of that plays out as we progress through the year. Regarding our expectations for other areas of the profit and loss statement, we have maintained our outlook for our FORCE cost savings. Our other manufacturing costs appear to be improving. In January, we discussed the pressures we faced due to the surge in Omicron, but fortunately, that resolved relatively quickly in North America. This has allowed us to stabilize our supply chain better than we anticipated back in January, which is a positive outcome. Additionally, in the first quarter, our general and administrative spending, after accounting for all variables, turned out to be slightly favorable when excluding currency effects and other factors. In this challenging environment, we will closely monitor our spending throughout the year and how all these factors come together to keep us within the guidance range we set in January. There is still considerable volatility and many moving parts, so we will need to see where we ultimately land.

And, Stephen, I agree that $375 million is a significant figure. However, we are pleased with the team. As Maria mentioned, volume has been a crucial factor for us. We planned the year based on estimated elasticities, and it remains to be seen how things will unfold. Given our first quarter, I can say that volumes are trending better than we initially anticipated.

Yes, very good. Can you tell me if any of the incremental $375 million was realized in the first quarter? Is it just the timing of how that will flow through? I assume it will be more back-end loaded, but any insight on that would be helpful.

Sure. It did hit us in the first quarter. We saw a meaningful spike in commodity cost pricing, particularly in the month of March, as global events unfolded. So probably a-quarter of it hit in the first quarter, and the remainder of it will come in the rest of the year.

Okay. So it's more prorated then. Very good. And then, just one last thing, if I could? Is there any way to quantify what the Texas storm impact was on growth this year in terms of the benefit?

In the first quarter, we likely experienced around 2 points of organic growth. We are mostly comparing with last year, particularly March, when we felt the effects. We will continue to cycle through a month or two of that in this quarter as well, so it's important to keep that in mind. That event did have an impact.

Okay. Thank you very much.

Thanks, Steve.

Good morning Jason.

Hey good morning folks. Thanks for slotting me in. Let me echo the sentiment, congrats Maria. Well earned. I think we've had the pleasure working together for now well over a decade, and you will be missed. And Nelson, welcome on board. Looking forward to getting to know you. Dig into the business, a couple of questions, please. I guess let's first talk about D&E. We haven't seen a negative volume number in your personal care D&E business in quite some time. And I know it's only negative once, so I'm not trying to sensationalize anything, but there's obviously some sensitivity around tap those markets. So can you unpack what drove it this quarter? And then perhaps elaborate on how you're seeing concerned behavior in emerging markets change in each of your core markets as inflation pressure mounts?

Yeah. Yeah, Jason, maybe I'll start here. Overall, I think we're very pleased with our D&E growth overall. Personal care growth continues to be very strong behind what I mentioned earlier under Lauren's question, strong innovation, really strong local execution. Organic was up 11% in the quarter. High single digit on price, low single digit on mix. And then yeah, as you mentioned, a 1% volume decline overall. I'd say it's mixed across markets, and maybe the one area that I'd point out is in Latin America for us, a little softer on volume and a little softer on share. The big driver of that is, Jason, as you're well aware with our previous discussions, we're prioritizing margin recovery, but we want to be balanced and holistic about it. And so we're trying to balance margin recovery, organic growth, and share. And I would say we're probably faster on pricing in a number of our key markets, including Latin America. And so that's probably had an impact on both volume and share. And our shares are still overall up and over 50% of are what we call cohorts or market category combination, so we feel good about that. It's a little less than what we have been doing in the last couple of years, which is about two-thirds, right? And so we'd like to be in that two-thirds range. But recognize that's a high bar. That said, we also recognize when we're moving quickly on price that we're going to have some ebbs and flows on market shares in local markets.

Yes, that makes sense. Thank you. Turning to the professional business, volumes still haven't really recovered, have they? Comparing Q1 2022 to the same quarter in 2019, volumes are down about 17% to 18% from pre-COVID levels. So, I have two questions. What needs to happen for you to return to normal levels? Given the current situation, it seems prudent to consider that a full recovery may not happen. Are there any rightsizing initiatives you need to implement within the organization to adjust to the lower volume base?

Yeah. Overall, Jason, I will say we're encouraged by the professional demand improving. Organic was up 6% in the quarter. And to your point, not back to where it was, but mid-single-digit growth in North America and high single digit in the rest of the world. Washroom demand recovering was up 30% in the quarter and now back to 90% of our pre-pandemic levels. I think we do know enough. And I agree with you, I don't think it's going to go back to where it was. I think our team is making the right plans to size the business appropriately and recognize this is the reality of where we are. And so we need to go from there. And so they've got a margin recovery plan and a cost plan and are diligently working on that. Obviously, a key component of that margin recovery plan is price, which we've executed very, very well, and we're encouraged with our start. I will point out, we do expect better volume performance. I mean we have great capability. We have great innovation in the market this year. We have this, what we're calling an ICON, a better dispenser that our end users are very excited about, and that's driving our growth. So our shares in the segment, especially North America, are up. The team's performing well. But you're right, I think we have to recognize that probably the business is going to be a little different size than it was pre-pandemic, and we're going to be ready for that.

Yes. Thanks and congrats on a good start to the year. I'll pass it on.

Andrea, good morning.

Hi. Good morning. How are you? First, congrats to Maria, and welcome, Nelson. Looking forward to working with you as well. So, first, a clarification that you removed the comments about SG&A and the FORCE savings. And given the higher cost pressures and from Maria's comments earlier, are you taking from marketing spending down since the consumer, particularly in the US, has been stronger than anticipated? And on the pricing commentary that, I think, it was incremental to what you had in plan. Which categories are you hoping to get additional pricing from plan before and the timing of it? And just a follow-up to Mike's commentary about China. I mean, impressive high single-digit performance there for another quarter. So how are you trending in April, given the lockdowns and what we hear about e-commerce also being impacted there? And what is your expectation for the category? Thank you.

I will begin with the cost side. Our outlook for the FORCE cost savings remains unchanged at $300 million to $350 million for the year. In the first quarter, we experienced significant savings from our productivity programs, and our pipeline for cost-saving opportunities is healthy. We are confident in achieving our FORCE cost savings range, with expectations that the savings will increase throughout the year. However, it's important to note that these savings do not come in a straight line—they can be uneven depending on the projects and programs we are executing. In this quarter, we encountered increased distribution costs, which negatively affected our FORCE cost savings. The reported $50 million of savings is a net figure that accounts for both the positive impacts of our productivity efforts and the substantial challenges on the distribution side that affect our net cost savings. Overall, we had good delivery in the quarter, and our pipeline of opportunities remains strong. I appreciate the question about brand support; I want to clarify that we are not cutting back on it. Our advertising plans for the year are robust, and we plan to continue supporting our brands. Outside of advertising, we will maintain strict discipline with our SG&A spending to balance profit delivery in light of current conditions, especially considering input cost inflation. However, our advertising remains strong.

Sure. Andrea, I’d like to build on what Maria said. We are focused on achieving balanced and sustainable growth, with priorities on accelerating growth and recovering margins. Currently, our brands are performing well, and our categories are in good shape. We will keep investing to strengthen our categories, brands, and markets. As I mentioned earlier, we are taking a comprehensive approach to counter inflationary pressures, aiming to balance price, volume, and market share. To address your second question, we have adjusted our pricing and acknowledge the need for price realization to improve. We have achieved this in various ways, including altering pack counts, increasing list prices, and reducing promotions. I wouldn’t say this is consistent across all markets; we depend on our local markets to be flexible and respond to specific circumstances. Overall, pricing has increased, with some reductions in promotions in certain areas, while in others, prices have seen a slight rise. In North America, prices have increased slightly because we have held back promotions over the last couple of years, and our promotional spending is still lower than in past years. However, that depends on what you are comparing it against. Ultimately, Maria’s main point holds true: we are committed to balanced and sustainable growth and expanding our brands, so we will continue to support them appropriately. Regarding your question on China, I am not yet ready to discuss April as we are only prepared to talk about this current quarter. We have indeed been impacted by the COVID lockdowns like everyone else, but we will provide more information on that in our next call.

I have one final clarification regarding the pricing and the increase in inorganic. Should we understand that initially, you were more cautious about the elasticity and the volume decline? I recall a significant volume decline was factored into the initial guidance. Now, your perspective on pricing seems slightly more optimistic because more companies are implementing additional pricing, including a competitor's recent announcement in Family Care. So, is it correct to say that it's a combination of factors, primarily due to elasticities performing better than expected?

I would say volume has improved slightly overall. We are still assessing the situation regarding elasticity, and the overall volume in the first quarter came in slightly better than we had planned. However, we are still waiting to understand the complete impact of elasticity. Historically, when I look back at our last pricing strategy a few years ago, volumes generally performed better than we had predicted in some instances, and were mostly on plan in others. We are still working through these factors. Nevertheless, I believe the main takeaway is that our increase in guidance reflects our expectation of more pricing in the market and a slightly better performance than we initially anticipated.

Perfect. Thank you so much. Thanks again.

Good morning Peter.

Good morning everyone. I hope you are all doing well. I wanted to follow up on the previous point regarding elasticities. Could you remind us of the assumptions reflected in your guidance? Are they based on historical elasticities? If those assumptions do not hold, which seems to be a broader trend today, would that indicate potential upside, or does your guidance assume that current market conditions will remain unchanged?

Yes. I'll make a quick comment before Mike jumps in. What I would say is that, our assumptions around the elasticities have been informed by historical performance over a long period of time and particularly looking at what happened during more challenging parts of the cycle. So that was informed, but it's not an equal to. So it's not mathematical. We apply judgment based on what we're seeing today and where we stand today in each of the markets competitively with where the consumer is and the consumer dynamics in each of those markets. So, I'd say, we apply judgment, but it's certainly informed by what's happened historically. But, Mike, you probably have some comments.

No, I don't think I have much more to add to that.

Okay. No, that's helpful. And then, I guess, just turning to margins, and I appreciate all the color on it, and depletion and pricing in the release in the prepared remarks. But I was just kind of hoping to drill down on just the phasing, because there's just a few comments that stood out. I think, specifically, you said in the near term, these commodity costs will offset the top line growth. And then later, you kind of mentioned improved financial delivery sequentially. So how should we think about the phasing of gross margins through the balance of the year or kind of just the balance of the commodity pressures that you've kind of outlined? And then, based on kind of where things stand today, like when should we kind of expect a return to margin expansion?

Yes, I'll begin. First, I want to discuss the phasing. If we look at the first quarter, I believe the second half of the year will show improvement. Regarding the second quarter, we're currently facing challenges with commodity costs, which have been rising throughout the quarter, with particularly high prices in March. Many of our commodities are still on an upward trend. Therefore, in the next quarter, we will likely continue to experience significant pressure from commodities before we see normalization. It remains to be seen how this will unfold, but I want to highlight the second half of the year for potential margin improvement. We aim to gain momentum as the year progresses, especially as pricing aligns more closely with inflation. We did implement price increases in the first quarter, but the effects haven't yet been reflected in the profit and loss statement. As those changes take effect, they will enhance our margins in conjunction with our FORCE cost-saving initiatives throughout the year. While progress may not be linear, I anticipate that the second half will outperform the run rate we saw in the first quarter. There are many variables at play, and while I cannot specify when we will revert to 2019 margin levels, we definitely foresee improvements this year.

I want to build on that point, Peter. We definitely anticipate strong progress on achieving better pricing, and you can observe it happening. I am confident that we will be able to restore and ultimately expand our margins. However, as Maria mentioned, we can't pinpoint exactly when this will occur because it largely depends on inflation trends. I believe commodities will revert back to normal levels; this is something our long-term investors have witnessed in the past. However, in the short term, inflation is currently much higher than historical averages. For instance, between 2021 and 2022, at the midpoint of our guidance, we will face an additional $2.7 billion in inflation, which represents a 1,400-point drag on our operating margin. I assure you that we will make progress in restoring our margins, and we expect our pricing adjustments to largely counteract inflation. This may not all happen this year, but our teams are working swiftly and making headway. Additionally, as I mentioned, commodities will revert, and that will expedite our recovery timeline. It's difficult to determine exactly when that will be, as we anticipated a slight decline at the beginning of the year, but just three months later, we increased our inflation estimate by $375 million. Moreover, the energy markets have been distinctly influenced by unforeseen factors that weren't in our initial plan.

Thank you for that. And Maria, congratulations and wish you the best of luck moving forward.

Thank you.

Hi, good morning.

Good morning Wendy.

My first question has to do with private label because you're one of the few companies who cover that does do some private label manufacturing. So can you remind us, number one, just ballpark what percentage of your volume is for private label brands? And then second, just if there's any outlook you have, I know that you said in the past that you only do private label when it sort of benefits your brands and strategic relationships. But can you give us a sense whether any of the big retailers you work with are coming to you saying, hey, we want to put more power behind private label given the pricing environment. Anything you can offer just in terms of where you're situated and whether you think private label is going to grow as a piece of your business over the next six to 12 months?

Overall, I would say that private label is not a central part of our growth strategy and represents a small segment of our business. We engage in private label selectively, based on strategic accounts or propositions. However, building capacity is costly, so we primarily concentrate on our main brands unless there is a compelling strategic reason to diversify. I should note that private label did see some growth this quarter, which is a shift from previous quarters, and it performed well in about six of the eight categories we monitor. While we remain attentive to these developments, our main priority is to enhance our value proposition for our products. Therefore, even as we implement price increases, we are simultaneously focused on improving product quality and enhancing the features and benefits of our brands.

So it's less than 5% of our sales.

Less than 5%. Okay. And can you just clarify the strength that you saw in the quarter, again, even if it's small, was it in the US or in Western Europe?

I was mostly referring to North America. In North America, we saw that six out of the eight categories we track were either stable or had increased.

Okay. Fabulous. And then just one more follow-up to an earlier question about China. Your strength, high single-digit growth in diapers and fem care is obviously terrific and great to see and a departure from what we've heard from other companies who've been struggling in China, not just with the supply chain, but lots of different things. And so, my question is, is it just a market share, well and about performance for you? Do you think there's anything different in terms of how you're distributed, or are you promoting exceptionally a lot, or anything different that's enabling you to do well in China, maybe when some other companies are struggling more?

I don't think it's an issue related to distribution channels or promotions since we are maintaining discipline with our pricing. The key point, as Alison mentioned at CAGNY, is that there are significant opportunities in many of our markets to enhance the premium positioning of our category. This may seem challenging given the current pricing and inflation affecting consumers, but in the long run, particularly in China, the average value per baby sold is less than half of what it is in the US and other developed markets. Thus, there is a considerable chance for us to enhance our category's premium offerings. Our product mix has been a crucial factor; we've seen our super premium mix double in the last year. Additionally, we're proud to have achieved share leadership in the diaper segment in China nearly two years ago and continue to build upon that success. While we acknowledge that there are some unfavorable trends, such as declining birth rates, we still see opportunities for growth in value.

Terrific. Thanks so much for the color.

Thanks Wendy.

Hey Lauren.

Thank you. I wanted to briefly discuss consumer tissue. At CAGNY, there was a mention of the efforts being made to apply the same successful strategies from personal care to the tissue category, focusing on elevating the category's support. Although it's challenging right now due to cost inflation and market volatility, could you share any strategies for that business? I'd be interested to hear more if we have time. Thank you.

Thank you, Lauren. I believe you're correct. We have an opportunity to enhance all of our categories, and I think that will be applicable. Our teams have been actively working on tissue across the globe. However, some of our efforts have been overshadowed, particularly in North America, due to significant volatility over the past few years related to COVID. For context, that category experienced a 28% increase in 2020, followed by a 20% decline last year. There has been considerable fluctuation. Nevertheless, we still see substantial potential to enhance the category by promoting better Kleen, particularly in tissue. We've gained some momentum with Kleenex and are expanding its usage. We're excited about this and are dedicated to our efforts. The tissue categories in North America have experienced more volatility, primarily due to extreme fluctuations in demand. In contrast, markets like Latin America and Western Europe have faced more pressure regarding pricing dynamics.

Okay. Great. Thanks so much.

Okay. Excellent.

Great. Thank you. So thank you for joining today on our conference call, and we look forward to talking to you soon. Thanks.