KMB Presentation: RCMP

By: Paul Ripsky, Joe Vaccaro

4/21/2009

Current Position and RecommendationPurchased 300 shares of KMB on April 20th, 2005 at

$63.91/share

Purchased an additional 100 shares on November 30th, 2008 at $56.29/share

Currently own 400 shares at $49.92/share (4/20/09)

Recommendation : HOLD

Company OverviewKimberly-Clark Corporation engages in the

manufacture and marketing of health and hygiene products worldwide

Founded in 1872, headquarters in Dallas, TXNearly 53,000 employeesOperations in 35 countriesConsumers in more than 150 countries worldwide

Over ¼ of the world’s population uses Kimberly-Clarks products everyday

The number 1 or 2 market leader in over 80 countries

Business SegmentsPersonal Care

Disposable diapers, training and youth pants, and swim pants; baby wipes; and feminine products

Consumer TissueFacial and bathroom tissue, paper towels,

napkins, and related products for household use

Business SegmentsK-C Professional & Other

Facial and bathroom tissue, paper towels, napkins, wipers and various safety products for the away-from-home marketplace

Business SegmentsHealth Care

Surgical gowns, drapes, infection control products, sterilization wrap, disposable face masks and exam gloves, respiratory products, and other disposable medical products

Product Profile

*Kimberly Clark 2008 Annual report

Macroeconomic Overview2008 was a challenging year with the

unprecedented volatility within the market:Slowdown in world economiesLarge swings in commodity pricesExchange RatesLack in the credit markets

Historically the consumer staples industry has been defensive during times of recession

Macroeconomic OverviewCommodity Outlook

Kraft pulp and petroleum based commodities are the main raw materials used in the manufacturing processMajority of raw materials purchased from third

parties8% of pulp is produced internallyDerivative products haven’t been used to mitigate

these risks

NBSK Pulp Index$900

800

700

600

500

400

CME Wood Pulp Futures

Management AssessmentMaintained a solid financial position throughout

the economic downturn

Committed to the manufacturing, researching and disposing of products in an environmentally safe way

Concentrates on the needs of consumers

Revamping supply chain network

Management AssessmentMaintained & Developed Product

SegmentsIncreased R&D to support long-term growthExpansion within K-C Professional &

Healthcare

Global ExpansionHit opportunities within Emerging MarketsConcentrating on BRICIT Countries

SWOT AnalysisStrengths

International diversification

Global Market Leader

Brand name

Commitment to environmentalism

Innovation/Product Improvements

Weaknesses

Mature Markets

Patent Losses

Dependency on Commodities

Opportunities

Emerging Markets (BRIC Countries)

Demographic Trends

Resistant to Economic Cycles

Threats

Intense industry competition

Commodity prices

Currency volatility

Industry OutlookConsumer Staples/Personal Products

Competitive Factors :Brand recognition and loyalty, product innovation, quality

and performance, and marketing and distribution capabilities

Industry consolidation could lead to pricing pressure

Substantial development and marketing costs when introducing and improving products

Moderate Bargaining power of buyersNet sales to Wal-Mart was approximately 14% in

2008

Relative Valuation: Comps

Historical Stock Price (One year)

Recent Trends

Recent Trends (cont)

Cash Flow Pattern Indicates Mature Company

Balance Sheet FAQs

DuPont Analysis

WACCAdjusted WACC based on

10% cost of Equity

Growth Estimates

DCF Analysis

Sensitivity Analysis Reveals Price Range of $48 to $61

Dividend Growth Model

Dividend Growth Model (cont)Sensitivity Analysis

$41 ~ $62 for Constant Growth

Sensitivity Analysis $46 ~ $57 for Two Step Model

Correlation Matrix

RecommendationPurchased 300 shares of KMB on April 20th, 2005 at

$63.91/sharePurchased an additional 100 shares on November 30th,

2008 at $56.29/shareCurrently own 400 shares at $49.92/share (4/20/09)

Recommendation: HOLD our current position of 400 sharesEvaluation shows fair value between $46-57Current Market price $49.92 (4/20/09)