Thomas Falk, chief executive officer of Kimberly-Clark Corp., has two primary goals: setting realistic expectations and protecting the core business. Achieving those objectives has been challenging, as the Dallas-based manufacturer of consumer paper products, voted the Most Shareholder-Friendly Company in the Paper & Packaging sector, has been buffeted by the global financial storm; its share price tumbled 25.0 percent in the 12 months through February.
“There is no question that good results generally result in happy investors,” Falk says. In times like these, when good results can be hard to come by, communication with investors and analysts becomes that much more important, he adds.
In January the company announced that fourth-quarter sales had fallen short of expectations — declining 3.4 percent year-over-year, to $4.6 billion — and revised its 2009 forecast from a range of $4.45-to-$4.60 diluted earnings per share to a range of $4.00-to-$4.20 per share (compared with $4.14 per share last year). Management also reported that contributions to shore up the company’s pension plan would skyrocket to $530 million, up from $130 million last year.
Falk and his investor relations team keep shareholders informed of developments — even when the news is not good — by scheduling regular meetings in the offices of buy-side analysts in major markets and by making themselves available to answer questions.
“Good investors are always probing for the soft spots in your strategy and your deliveries,” he says. “They have done their homework.”
Despite the company’s disappointing results of late, Falk notes that “there are many opportunities to grow the core businesses,” particularly in Brazil, China, Russia, Turkey and Vietnam. Emerging-markets sales surged about 15 percent last year but were more than offset by negative currency conversion effects of nearly 17 percent, resulting in a net decline of about 1 percent. Although Falk says he expects sales in emerging markets to continue to grow “dramatically,” fluctuating foreign exchange rates could cut into sales by as much as 7 percent this year.
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