K-C grows North American volume by 5%, and reports 4% decline in average pricing

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K-C grows North American volume by 5%, and reports 4% decline in average pricing

August 05, 2015 - 14:42
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OAKLAND, CA, 24 July 2015 (PPI Pulp & Paper Week) - In possibly its deepest quarterly price drop in years, Kimberly-Clark' (K-C) reported a 4% decline in its consumer tissue prices in North America in the second quarter, vs second quarter 2014's average.

Even with the 4% price decline, the company reported that consumer tissue sales were flat and volume actually increased 5%.

"Volumes rose high-single digits in bathroom tissue, with benefits from increased promotion shipments on Cottonelle. Volumes increased low-single digits in facial tissue and paper towels." the company reported on July 23.

K-C is the second or third largest tissue paper producer in North America with Procter & Gamble, behind Georgia-Pacific.

Major producers have not officially increased consumer tissue product pricing following a formal announcement four years ago in North America. The US's second largest private label producer, Clearwater Paper, did announce a consumer tissue increase for August and First Quality tried one last year. No others were known to be out with increases as of last week on consumer tissue. In After-from-Home tissue, North American producers implemented a price increase last year.

Producers, including the largest, did increase prices unofficially since second quarter 2013 by reducing sheet counts and roll sizes. During that period, major producers also appeared to increase national advertising for their products both on television as well as with specialized inserts.

K-C's chmn and CEO Thomas Falk told analysts on July 23 that, in consumer tissue, "competitive activity has probably picked up just a little bit."

"We are continuing to do well with Cottonelle and have seen that take off ... (and) Scott Tissue is also continuing to do well in the market," he said. "So probably, maybe the competitive frequency has picked up just a bit and you are seeing that a little bit in the pricing number."

He added that some of the lower pricing resulted from "promotional (and advertising spend) timing. And so I wouldn't necessarily say that the uptick this quarter [in ad spend] was fully reflective about what's happened in the market. Some of it had more to do with timing of promotions than the overall market activity."