KMB
#Sure.
Let me take a crack at it and <UNK> can certainly jump in here.
Let me start with CapEx.
We're fortunate to have a lot of opportunity to invest in high-return capital projects that support both our top line growth and savings.
If you think about our CapEx, you can think of the spend in three areas: growth which supports expansion capital, and also investment behind our innovations.
Cost savings, which is a second category, a lot of that supports the FORCE savings that you're seeing come through, and that we talk about.
And then the third category on maintenance, we fund our operations to adequately maintain a productive and safe manufacturing environment.
So those are the three categories.
And I think the range of $950 million to $1.050 billion is about right for our business now, given the opportunities that we have and the size of our operations, and the opportunities that we have for expansion in some of the geographies.
We'll continue to monitor that over time.
As you know, we hired a Head of Global Supply Chain and under her, organizations will work with the finance team and the local operators, to make sure that we continue to make sure that we're optimizing our CapEx spend, as we move forward.
On working capital, I said that I thought our working capital usage was a bit higher than we'd like it to be.
I think the areas of opportunities that we have in 2016 are around areas like inventory.
We talked about strong performance on payables in 2015, and so, again, with our global supply chain organization, working with our local teams, we'll be focusing on what we can do on the inventory side.
And then in 2015, we also had some negative impacts on working capital from currency, on our derivatives settlements, that we used to manage our exposures on the balance sheet.
And then also, we had a large tax receivable that moved up into AR at the end of the year.
So when you look at the numbers, that's in there, too.
I think the third part of your question was around buybacks.
And that goes back to what I said earlier, that we're very focused on maintaining our single A credit rating.
So there's, as you know, a set of metrics around single A and we watch those very closely.
Then, look at how do the cash flows come in, make sure that we fund the dividends, invest in our business through CapEx, and then the remainder determines how much we buy back.
And we use both cash flow, and then any capacity that we have on the debt side within that A rating, to really fund buybacks.
So depending on where the results of the operations come in, will depend on the flex within the range on the share buybacks for 2016.
Well, the way to think about it in terms of how we're approaching it is, we're not necessarily trying to cover the translation exposure, which is probably the biggest piece of it.
We are trying to cover the transaction exposure.
But as you look at our net income impact, that also includes things like the balance sheet remeasurement in Argentina that flowed through other expense or any other hedging gains or losses.
They're looking more like the run rate transaction exposure on the impact on imported materials, and what their ongoing cost of goods is going to be, and using that to think about pricing going forward.
And then balancing that with what's your innovation plan look like, what other things can we do to substitute a local source material, and avoid the transaction exposure.
It is a market by market approach, and again, I would say in Latin America and Eastern Europe, is where you found both those markets are, I guess I'd say, used to dealing with high inflation.
And so when you get hit with this, people aren't shy about taking price.
But other markets, you're not going to see that in Korea, you're not going to see that in Australia.
I think the biggest disconnect is e-commerce in China, <UNK>.
So single day was November 11, which was huge for us, as well as for all of the online players.
So that probably skewed the Nielsen data, which tends to look at measured and baby stores, because there was a lot of online activity, and particularly in November.
But again, I'd say if you were to decompose our growth in China, we increased the number of cities.
I think we started the year at 105.
We ended the year at 115.
We'll be at 130 by the end of this year.
Now, each incremental city is incrementally a little bit smaller, but you still are seeing good geographic expansion.
We're still growing share in the cities that we're in.
We're doing a ton in e-commerce, and that channel is growing pretty dramatically in China.
And so it's probably a third of our diaper sales were in e-commerce, which is overweight the rest of the category.
We're still seeing good mid-tier super premium segment growth, where we tend to do better.
So again, I'd say China, we're pretty bullish, lots of competition but good growth in innovation coming, and some geography expansion, as well.
We've been talking about euc for a while.
That's the biggest grade that we buy.
I don't know, <UNK>, probably what, two-thirds of our fiber mix on the virgin pulp side, I guess.
Is that about right.
It would be two-thirds, if you're just looking at eucalyptus versus Northern softwood.
Then that also consumes some fluff pulp in pers care.
Overall, I'd say eucalyptus is still roughly half of our fiber mix.
It's the biggest single grade, which is why we started quoting that one versus Northern softwood.
We're not giving a range.
But it should be down a little bit year on year.
Probably just take whatever RISI was looking at, and that's essentially what our forecast would be.
I haven't looked at that in a while.
My guess would be, <UNK>, is that we're pretty similar to P&G.
And GP might have a little bit more variability, just because some of their tissue mills are more connected to their own internal pulp sources.
That would be my hypothesis.
On the KCP front, we all run with a lot of recycled fiber on that front, so we'd be pretty similar on the KCP front.
I think this is probably more fiber morphology than you're interested in on a Monday morning.
Eucalyptus helps make tissues soft, but it's not as strong as Northern softwood.
So you get that right, now, hardwood makes it soft, and softwood makes it strong.
We've been trying to drive more softness and use more eucalyptus, and you're trying to figure out ways to make the tissue stronger using other means, so that you don't give up the strength that Northern softwood would bring you.
But I think there are even some markets where we've run 100% eucalyptus sheet, and are able to do that, and still hit adequate strength targets.
That's a tough one to call.
We tend to just look at the ---+ we take two or three industry forecasts, RISI being one, and I think we look at a couple of others and we don't apply an immense amount of judgment to that.
We tend to take a look at what the predictions are calling for.
I do think the weakening of the US dollar in some of these local markets may not be fully captured in the forecasters, because they're looking at forward currency rates, as well.
And so if you look at a Brazilian producer who is selling their product in dollars, or a Canadian producer who is selling their product in US dollars, certainly, you could make an argument that there could be some price decline.
From a capacity standpoint, the Canadian markets should be pretty stable for a while.
They have to run the mills this time of the year, or they freeze up.
There's some additional capacity coming in Brazil, but I don't think it's going to be until the end of 2016.
So we'll see what happens.
At this point we're not ---+ we're seeing a little bit of weaker spot prices for Northern softwood, but the eucalyptus market has been relatively balanced, and there's not a huge spot market on that at this stage.
<UNK>, I would just add that remember, as we talked about earlier, there's a lot of big moving pieces in our planning assumptions, but think about all of them together.
If pulp does weaken more than we're expecting, you could see some offsets and a bit higher promotion spending.
I would say the competitive activity has been relatively modest in tissue.
We've had a lot of news between Viva Vantage.
We've had some improvements on Kleenex.
We've had some upgrades on Cottonelle.
We want to make sure we get our fair share of quality promotional support, as have some of our other competitors.
The good news is, you didn't see much private label movement in the fourth quarter.
I think private label shares were pretty flat on bath.
I think private label was up half a point on the year on bath, was up a little bit more on towels, but we were up in both categories.
So I think it's just the normal competitive environment, and we'll see what happens going forward.
If you do see a big move in pulp, that typically would lead to a change.
I think the relatively modest moves that we're talking about shouldn't have a major impact on promoted pricing.
All right.
Thanks everyone for the questions, and we'll conclude with a comment from <UNK>.
Well, once again we wrapped up the year with a very solid performance in 2015, and we've got great momentum, and we appreciate your support of Kimberly-Clark.
Thanks for joining us today.
Thank you.
