To reduce its pressures due to the increase in raw materials, such as recycled fiber and energy, Kimberly-Clark de México (KCM) will continue to implement the strategy of increasing the price of its products and will reduce its promotions, explained Pablo González, general director of the company.
On Friday at the Mexican Stock Exchange, one day after the presentation of its report for the first quarter of the year in which it reported record sales of 12.6 billion pesos, but a contraction in net income and EBITDA, KCM shares they increased 2.36%, to 29.08 pesos. With this, it accumulates a decrease of 6.22% so far in this 2022.
In a telephone call with stock market analysts, to discuss their financial results for the first quarter of this 2022, the manager recalled that in their Professional line they recently increased prices by 7% and are analyzing making another increase of between 5% and 6% during this quarter.
Through its Professional division, it offers hygiene products, such as hand towels, toilet paper and antibacterial soaps.
”On the consumer side is where we are analyzing what additional opportunities we have in terms of prices; we are about to enter the strong season of summer promotions and we are being much more careful in the way we allocate resources to those different promotions”, Pablo González commented in the call with analysts.
The manager recalled that inflation hit their costs, due to the “unprecedented” rise in the prices of raw materials, which caused gross profit to decrease 16% in the first quarter of 2022 against the same in 2021.
Virgin fibers increased by an average of 30%, imported fibers for recycling by close to 70%, while domestic fibers for recycling and fluff averaged increases of close to 15%, indicates Kimberly Clark from Mexico in her financial report.
Pablo Gnzález foresaw that in the case of the increase in the price of fibers, the greatest impact will be seen in the second quarter of this year.
“Costs are not going down. On the contrary, in many areas, they continue to rise, such as pulp, recycled fiber and energy. Some others have been flat or down slightly and are still at very high levels compared to last year,” she commented.
Given the volatility in the price of its inputs, it will also seek to increase its operating efficiencies and accelerate its cost reduction plan to achieve record savings this year.
González said that they will focus on investing in innovation and technology, for which they will allocate 100 million dollars for this year and the next.
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