Thomas Falk - Chairman and CEO Maria Henry - SVP and CFO Paul Alexander - VP, IR.

Wendy Nicholson - Citi Research Russell William Schmidt - Deutsche Bank Ali Dibadj - Sanford Bernstein Gail Glazerman - UBS Caroline Levy - CLSA Christopher Ferrara - Wells Fargo Olivia Tong - Bank of America Lauren Lieberman - Barclays.

Ladies and gentlemen, thank you for your patience in holding, we now have your speakers in conference. [Operator Instructions] at the completion of today’s presentation we will open the floor for questions. At that time instructions will be given as to the procedure to follow if you would like to ask a question.

I would now like to turn today’s conference over to Mr. Paul Alexander. Sir, you may begin..

Thank you and good morning everyone. Welcome to Kimberly-Clark’s Second Quarter Earnings Conference Call. Here with me today in Dallas are Tom Falk, Chairman and CEO; Maria Henry, CFO; and Mike Azbell, Vice President and Controller. Here is the agenda for our call.

Maria will begin with a review of our second quarter results, after that Tom will provide his perspectives on our results and the outlook for the full year. We’ll finish with Q&A. As usual we have a presentation of today’s materials in the Investors section of our website. Now as a reminder we will be making forward-looking statements today.

Please see the Risk Factors section of our latest annual report on Form 10-K for further discussion of forward-looking statements. We’ll also be referring to adjusted results and outlook. Both exclude certain items described in this morning’s news release.

The news release has further information on these adjustments and reconciliations to comparable GAAP financial measures. And now I’ll turn it over to Maria..

Thanks, Paul. Good morning everyone. I am happy to be in my first earnings call as part of the Kimberly-Clark team. I had the opportunity to meet some of you and I am looking forward to meeting many more of you as I begin travelling to meet with investors [indiscernible].

Let me go ahead and turn to our results for the second quarter, starting with some headlines. First, we achieved organic sales growth of 4%, in line with our full year target of 3% to 5%. Second, we delivered excellent cost savings and margin improvement and solid growth in adjusted earnings per share.

And third we continue to improve our capital efficiency and return cash to shareholders. Now let’s cover the details of our results, second quarter sales were $4.6 billion, that’s down 6% driven by a 10 point drag from currency rates. Organic sales rose 4% highlighted by a 10% increase in our developing and emerging markets.

On profitability adjusted gross margin was 35.8% in the second quarter up 140 basis points year-over-year. Adjusted operating margin was 17%, that’s up 130 basis points. Operating margins were up in each major geographic regions North America, developed markets and developing and emerging markets.

Our teams continue to deliver significant cost savings in order to improve profitability and fund the investments that we’re making behind our brands. Second quarter FORCE savings were $105 million equaling our previous all-time high.

For the full year we now expect that FORCE savings will be at least $350 million that’s up from our previous expectations of at least $300 million. In addition our organizational restructuring is on track and generated $20 million of savings in the quarter. Commodities were a $40 million benefit in the quarter mostly from oil based materials.

We now expect that deflation for the full year will be between $100 million and $200 million. On the other hand we continue to experience significant currency headwinds the total earnings drag from currency was approximately $0.30 per share in the second quarter.

For the full year, we expect that currency will negatively impact earnings by more than 20%. On the bottom-line, second quarter adjusted earnings per share were $1.41 that’s up 6% year-on-year and includes an approximate 3 point benefit from a lower share account. Now turning to cash flow and capital efficiency.

Cash provided by operations in the second quarter was healthy as $772 million, compared to the year ago quarter that was down $70 million driven by the spin-off of the healthcare business. Our second quarter working capital cash conversion cycle improved seven days compared to the 2014 full year average.

We now expect our full year improvement to be six to seven days and that’s ahead of our original three to four day improvement targets. This is mostly driven by additional progress on payables. In terms of adjusted return on investment capital halfway through the year we are up 220 basis points including benefits from the spin-offs.

We expect full year improvement on ROIC to be at least 250 basis points. On capital allocation, second quarter dividend payments and share repurchases totaled more than $400 million the full year total should be at least $2 billion or about 5% of our current market capitalization. Now let’s take a look at the segments.

In Personal Care, organic sales rose 5%, performance was led by developing in emerging markets where organic sales were up 13%. Overall Personal Care operating margins were 20.5%. The 190 basis point improvement year-on-year was enabled by three things, organic sales growth, cost savings and lower input cost.

Moving on to consumer tissue, organic sales were up 1%, including volume growth of 5% in North America. Consumer tissue operating margins of 17.3% were up 260 basis points. Result from this segment benefited from strong cost savings and lower between the line spending. In our third segment K-C Professional delivered organic sales growth of 5%.

Within that organic sales were up 8% in developing and emerging markets and up 2% in North America. The segment top-line also benefited from sales of nonwovens to Halyard Health in conjunction with a limited term supply agreement. Overall K-C Professional margins were 17.6%, up 20 basis points year-over-year.

I am encouraged that K-C Professionals margins remained healthy and above the corporate average.

To summarize, we had a good quarter as we achieved mid-single-digit growth in organic sales and adjusted earnings per share, we delivered strong cost savings and margin improvements and we continue to improve our balance sheet efficiency and allocate capital in shareholder friendly ways. With that, I’ll now turn it over to Tom..

Thanks, Maria and good morning, everyone. I’ll share my perspective on our second quarter results and then I’ll address our full year outlook. So, overall we delivered another quarter of good financial results and we are executing our global business plan strategies very well.

As Maria just mentioned our business in developing and emerging markets had another strong quarter and that was led by our Personal Care business.

Organic sales in diapers rose low teens in these markets and we continue to benefit from innovation from expansion of diaper pants from the category development in many areas and from higher net selling prices in some places.

And in terms of our key growth markets, organic sales in diapers increased 30% in China where we continue to drive strong growth even though competitive activity has picked up somewhat recently. Huggies diapers are now sold in about 110 cities in China and that’s up from 105 cities at the end of last year.

Our organic sales in diapers also rose by 30% in Eastern Europe the growth this quarter was driven by price increases to offset some of the currency declines that have happened in that market. In Brazil, our team continues to execute well in a challenging economic environment.

Total Personal Care organic sales were up about 10% in Brazil and that included 5% growth in diapers. We’re also doing well in our other Personal Care businesses in developing and emerging markets organic sales in fem care were up double-digits in the second quarter and that included excellent performance in Latin America led by Brazil.

Organic sales also increases strong double-digits in baby wipes and in adult care. And our K-C Professional business had high single-digit organic sales growth in developing and emerging markets in the quarter.

So overall we delivered excellent results again in the developing and emerging markets and we expect our momentum to continue there going forward. Turning to our developed market business outside North America organic sales in the quarter were down slightly.

We had solid growth in South Korea, but market conditions were relatively soft in Western and Central Europe. Nonetheless I am encouraged that operating margins were up year-on-year in the developed market overall.

Moving to our North American consumer business, sales volumes were up nicely on a number of brands that included Huggies baby wipes, Goodnites Youth Underpants, Cottonelle bathroom tissue, Viva paper towels. On Huggies diapers while still early day the second quarter relaunched of mainline Huggies Snug N’ Dry diapers is off to a pretty good start.

In terms of upcoming innovations in North America, we have product upgrades coming on both Huggies premium diaper and Pull-Ups training pants and in adult care we’re launching Poise Impressa, which is a unique innovation that helps prevent Light Bladder Leakage.

And in K-C Professional North America volumes increased mid-single-digits in our higher margin faster growing wiper and safety products businesses. In washroom products volumes were up low-single-digits as market conditions continue to improve modestly.

Since Maria has already discussed our profitability balance sheet and capital allocation I will just add that I am pleased towards our performance in all of these areas. So all-in-all I am encouraged by our results in the second quarter and in the first half of the year. Now let’s move on to the outlook for the full year.

Our teams continue to focus on delivering their plans for the year and investing further as appropriate for future growth. On the top-line we continue to target organic sales growth of 3% to 5%. With organic sales up 4% halfway through the year we’re in good shape relative to this target.

On the bottom-line we've raised the low end of our previous guidance by $0.05 a share. Our new guidance range for adjusted earnings per share is $5.65 to $5.80 a share. This change reflects our strong performance in the first half of the year and our progress on FORCE costs savings that Maria highlighted.

We’ve also stepped up investments in our brands and our targeted growth initiatives from what we originally planned. As we continue to be optimistic about the growth opportunities that we have in front of us.

In terms of external factors our current expectation is that the net impact of changes in currencies, commodities and selling prices probably similar to our original plan that we communicated to you in January.

The commodity outlook has improved somewhat, but we expect that price realization will be a little less positive than what we expected earlier in the year. And as we said in April we expect more currency headwinds than we had in our regional plan for the year.

We continue to focus on delivering on our annual commitments that said as you look at the back half of the year I’ll point out that last year’s earnings profile was unusually skew to the third quarter. Third quarter last year had more than normal amount of other income, had a strong quarter in Venezuela and had lower than expected G&A spending.

So in summary we delivered very good results in the first half of the year, we continue to focus on the fundamentals that drive long-term performance and we remain optimistic about our prospects to generate attractive shareholder return. So that wraps up our prepared remarks and now we’ll begin to take your questions..

Ladies and gentlemen at this time we’ll open the floor for questions. [Operator Instructions]. The first question will come from Wendy Nicholson with Citi Research. Please go ahead..

Hi, I have two sort of buckets of questions if that’s okay? The first one just on a diaper numbers that you break out, okay so the 5% in Brazil can you clarify how much of that is a slow down just in the macro just in the macro is a slowdown in the consumer off-take, is it inventory destocking and is that number sort of in your mind in terms of what’s going to process over the next couple of quarters? And then totally separately, Maria sort of as you come into the company fresh perspective, new look I mean the FORCE savings that Kimberly has been generating are just phenomenal, and I guess as you look at the cost structure sort of with a fresh set of eyes is this rate of cost cutting sort of something that you think is sustainable for the next few years or are we coming sort of to the end of that part of the story? Thank you..

Okay, sure. I’ll take the first one and I’ll let Maria answer the second question. So in terms of Brazil, I mean overall we’re pretty happy with our performance in that market on the consumer side. We didn’t talk much about our KCP business. But on the B2B side that economy has slowed down.

There is no question about it and we are seeing that in our KCP sales in the industrial side customers and at this point we’d say that the category is a little slower on the other hand we had a great quarter in fem care. So we’ve been able to bring innovation, we’ve seen that continue to drive the business.

And so we’re going to continue to invest in innovation and diapers and we think we can do a little better than we did this quarter overall. But it’s a more challenging market from an economic perspective that’s for sure. Maybe I’ll turn it over to Maria and she can comment on cost saves and her perspective on that..

Hi Wendy, thanks for the question. On the FORCE savings, first let me say I’m really proud of the Kimberly-Clark organization on a global basis for delivering just an outstanding quarter in FORCE savings of over $100 million in the second quarter. If you look at the rates for the - of at least $350 million.

That’s a really strong savings rate and I believe that we can continue to do this. If I think about the percentage of annual savings that we’re able to deliver off of our cost of goods sold base we are in a good place in terms of what we are delivering and with the addition of Sandra MacQuillan to our team, who is our new Head of Global Supply Chain.

I think Sandra will be able to work with the teams around the globe to unlock some additional savings as we go. So I feel really good about the rate of savings that we are delivering and I’m very confident that we’ll able to continue to deliver strong productivity in our supply chain area..

Thank you for your question. The next question will come from Bill Schmidt with Deutsche Bank. Please go ahead..

Hi guys, good morning..

Hey, Bill..

Hey, a couple of questions. Can we just like draw a little bit deeper in the emerging markets starting with Brazil.

I think if you look at some of the shared data of Hyper Mark [ph] out which is value brand is gaining share do you think that’s a change in sort of consumer preference or is it macro, is it permanent? And then I think SA [ph] also exited the market. So is that an opportunity and then in China can you just talk about I think you said 110 cities now.

What’s the sort of end state opportunity is like how many cities aren’t you in and then what channels and price tiers maybe? And then lastly on Russia I just wanted to check on the health of the distributors and how they are getting [indiscernible] product in and if there is I think you can just sort of help them out given the macro? And then I have a follow up if I can..

Okay sure. If I remember all those also Brazil I’d say EPRA markets is up a little bit and that business is for sale, as you probably know I think there is some stuff that they are doing a kind of push those sales in the short-term.

I wouldn’t say we’ve seen a lot of trading down in this market and spend the consumer shock hasn’t been as big as you’ve seen in other economies over time and so you are seeing a huge trade down at this point and we’re still driving premiumization across our line up in Brazil and you saw that in the fem care numbers as we launch better performing products that consumers want to trade up on that front.

So again I’d say the news of FCA leaving in some consolidation there I mean there are probably more competitors in Brazil today than your normal market at this stage. And so it’s not unusual to see a little bit of consolidation happening and typically that’s good for the big global players.

In China we are at 110 and I’d say it’s truly every city you add is a little smaller than the last, on the other hand these cities still have like a million people and so they are pretty good sized and there still quite a bit of opportunity. I would say at least 200 cities in terms of channels.

We are actually really developing e-commerce quite well and we’re also spending a lot of time on the premium baby stores and those are both rapidly growing channels.

Today probably a third of our diapers sales in China are done through e-commerce and the baby stores are a real super-premium channel where all the high end products are typically sold and you don’t see much in the value segment in that space.

I don’t expect we’re going to go deep into the low tiers in China, we’ve got quite a bit of growth ahead of us in the mid to premium tiers and expect us to stay in that space.

And on Russia, I was in Russia earlier this year actually I met with one of our KCP distributors and at that point they seem to be managing through the prices pretty well probably we’re little more optimistic than even I was going in terms how things were going to play out.

I think the oil prices has stayed down little longer is probably going to put a little bit more pressure on that economy.

So it’s something that we’re continuing to watch, we do manufacture now in Russia so that does help us a bit in some of our cost base in local currency and doesn’t require us to import as much, but that’s a challenging market for sure and we’ll keep an eye on that going forward..

Great, thanks. And if I just ask one follow-up on fem care in North America, I mean the category itself is pretty soft I think the shares are little soft as well is any of that due to your now having like a focus competitor in Edge well and obviously they have some pretty ambitious growth targets.

So are you seeing a lot more aggressive competitive activity from them?.

I would say there was a little bit more competitive noise in fem care in the last quarter that accounts for some of the share decline, we’re also looking to see are we executing as well as we could and we have enough news and innovation in commercial activity, but I would say that was a soft spot for us in the consumer business in the second quarter..

Thank you for your question. Our next question will come from Ali Dibadj with Sanford. Please go ahead..

Hey, how are you? So, couple of questions. One is I want to dig into Personal Care just a little bit more in terms of where your growth is coming from clearly it’s the emerging and developing world. That growth rate again continues to slow, it’s still good that continues to slow.

So trying to get a sense of where you think that kind of growth rate gets to on a steady state, you say the momentum is continuing, but is that momentum is slowing momentum, so that’s one part of the Personal Care of business. And then the other part I want to get a little bit more into the details of the Snug and Dry re-launch in the U.S.

so it still looks like the North America business for you on Personal Care isn’t really showing great results from the Snug and Dry launch is it just too early because on the other hand in the Nielsen data it looks like you might be seeing some improvement, so want to really understand what we should expect from Snug and Dry in particular and how you think that may change your Personal Care results in the U.S.

going forward? So those two pieces first please..

Okay.

So Personal Care growth rate, I mean we’ve said high single low double-digit growth in developing and emerging markets for us going forward and Personal Care is going to be the centerpiece of that and while there is some little bit of growth slowdown in some places there is also new markets that we’re continuing to open up like Nigeria and Kenya and places like that where there is pretty high birth rate.

So we do feel like there is a pretty long way to go to continue to penetrate these categories and GDP per capita is still improving even though the overall economic growth rate is slowing in some of these markets. And so consumers have more purchasing power in their pocket to buy our products going forward.

And so we also see categories like Adult Care, baby wipes that are still very under penetrated as we bring those into those markets there is a big opportunity to build those out overtime.

And so we’ve got some GDP per capita levers to drive that we’ve got some new category expansion to drive as well as some still some remaining geographic expansion to drive it and those factors I think will provide a lot of growth for us for future.

On the Snug and Dry re-launch I mean if you look at kind of the spread I think if you look at the Nielsen data and probably say we were up a percent in the quarter that’s probably pretty consistent as we would look at our consumption or our shelf off take would be pretty similar to that as we look at it across the parts of the category that aren’t covered by Nielsen and our sales were down about a percent, our share was up about half a point sequentially.

And so the difference between our sales and the retail consumption is probably inventory change in channels which obviously going to be sustained.

So we’d say we’re broadly on track with our expectation on that re-launch and pretty good execution across retail consumers like the product the early reads and all the social media activity is very high four and five star ratings.

And so that’s kind of what we’re looking for and expect to continue to drive that in the back half, we’ve also got some news coming on the super-premium end of our Huggies line up, which will help that, we haven’t seen much canalization on little bit of share growth that we’ve had which is great.

So, so far I think the team we would say we’re pretty much on track..

Okay. And then follow-up just on a former response in terms of Personal Care in the emerging market, I mean I guess just to be very specific, do you expect the growth rate to continue to slow given kind of large numbers et cetera as it has done. So maybe answer that and I’ll come back with another one..

I mean I think it was what 11 in the first quarter and 10 this quarter. So I would say that’s a modest slow down. But I would expect we’re going to be in that high single-digit, low double-digit range for a while I mean they vary a little bit depending on the quarter and what’s going on..

Okay, cool thank you. So my last one is just around the CapEx uptick that we saw in a part has been see it.

But can you give us a sense of where that's from what we should expect going forward?.

Yeah we’ll probably move to Maria you can add some color on this, but we’re probably a little ahead of our typical run rate it seems to be more backend loaded.

But I think we’re still expecting to be in the range, but Maria I don’t know if you’ve got any other color you want to add to that?.

Yeah, I think that's right. I would expect given where we are and the projects that we have on top for the second half that we will come out at the high end of our CapEx range for the year..

More of it's outside the U.S. than inside, as you would expect..

Thank you for your question. The next question will come from Gail Glazerman with UBS..

Hi, good morning..

Hey, Gail..

Can you talk a little bit detail about what’s going on in the U.S. bath tissue market. You guys obviously had great volume probably due to promote.

How do you see the overall spend in the promo activity there?.

Yes, probably competitive activity has probably picked up just a little bit. We are continuing to do well with Cottonelle and have seen that take off another selling quarter behind Cottonelle Scott Tissue is also continuing to do well in the market.

So probably maybe the competitive frequency has picked up just a bit and you are seeing that a little bit in the pricing number. Some of our price numbers as well affected some of the promotional timing. And so I wouldn't necessarily say that the uptick this quarter 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..

Okay and depends from of course the birth rate is starting to pick up and I was just wondering if you could just talk about are you starting just kind of see them, what are you thinking as you look out over the next year or two?.

Yeah, we’ve seen that as well and so it’s small positive upward momentum, which as we’ve been talking about for a while. The things that have been more predictive of that our male unemployment, household formation and consumer confidence and we’re seeing slow steady progress in those in the U.S.

economy and that's just driving the birth rate up a bit which is good..

Alright.

And in terms of your deflation outlook for the year, can you just talk a little bit about where you expect to see the incremental deflation over the second half, I mean what is the little bit better than what you might have expected three months ago?.

Yeah, pretty much all of our deflation is oil related material. So if you look at pulp and secondary fiber those are pretty close to our original estimates for the year.

So we’re not seeing those move around much, I mean eucalyptus is a little stronger, [indiscernible] is a little weaker and so the net-net it's about where we thought it was going to be. And so it's more polymer super absorbent, things like adhesives, packaging materials anything that's made out of a petroleum molecule.

Obviously with oil being a little lower than... for a little longer than maybe we thought in our original guidance more that’s kind of flowing through in our lower material cost than we would have expected at the beginning of the year. Most of that lines up in Personal Care from a segment stand point.

So consumer tissue and KCP don't get too much of that..

Thank you for your question. [Operator Instructions] The next question will come from Nick Moody [ph] with RBC. Please go ahead..

Yeah, thanks for the question. Just two real quick one for me.

Tom, maybe if you could just remind us on how you are thinking about acquisitions in terms of criteria and if you were to do an acquisition it's just really kind of building scale in existing categories or would you look at kind of wide space? And then the second question is on e-commerce it’s obviously becoming a very important trend for some of your categories so just wanted to get an update on that side of the business? Thanks..

Absolutely yeah the M&A we have not been big acquires and so where we have done things has been more tuck-in and I think we’ve got so many great organic growth opportunities in our businesses around the world that we really want to make sure we're fully funding those and that we're resourcing those in the right way and that's I think the most valuable form of growth for our shareholders and we want to make sure we’re pursuing that.

And so there may be tuck-ins and individual markets that we've considered from time to time, but we want to make sure we deliver on our organic growth framework. On the e-com front, we basically we want to make sure that our products are available wherever mom wants to shop.

And so if she is shopping at a nearby traditional retail outlet that's great we want to make sure we’re there with the right offer and the right product form. If she wants to shop online absolutely we want to make sure she can find Huggies and are lineup is easy to navigate and we will make it easier to find what she needs there.

And so we try to make sure that we’re building capability around the world where e-commerce is developing in where mom wants to shop. So that we have the skill sets to make sure that our products is represented in a digital space at the same level of professionalism that is represented in a physical store.

And so that’s something that we’ve learned we’re probably in the front foot on that in China. We’re probably little late to the game in the U.S. but we’re catching up quick. And that we’re kind of monitoring and investing ahead of the curve and individual markets around the world where we see e-commerce starts to play out..

Great.

And Tom is there any way you can give us just rough how big the current e-commerce business is and how fast it’s growing just so have a sense of reference?.

Yeah, I mean the statistics are probably difficult because if you sell to an offline retailer who has an online presence it's hard to tell exactly what flow through each part of their business, but it varies quite a bit by markets on the U.S. it’s probably less than 5% of our sales, in China and our diaper business is probably a third of our sales.

In Korea from a category standpoint in the diaper space it's approaching 60% of the category. And so overall it's probably still in the 5% or less of our sales just because some of our categories like tissue and KCP are not as well developed from an e-com standpoint yet..

Excellent, thank you so much. Thanks..

Thank you..

Thank you. The next question will come from the Caroline Levy with CLSA. Please go ahead..

Good morning. Thank you very much..

Good morning, Caroline..

I just wanted to ask a couple of things on the U.S. the adult diaper business and the fem care business.

Can you talk about the competitive environment and what the outlook is for innovation there and is P&G growing the adult category or are you seeing some share loss there?.

Yeah. I think in adult care Procter re-launched last year with their always discrete product and category growth rates did pick up. We lost a little less than our fair share of market share.

Probably done a little bit better on the Depend side, they picked up a little bit more share on with always discrete against Poise, but private label and SCA kind of brand loss probably disproportionately more share than we did.

If you look at the second quarter both Depend and Poise our share was up about a point sequentially but we were still down year-over-year from where the launch had occurred. It’s quite a bit of innovation happening we’ve launched quite a bit of new products over the last year or so and with more coming under both Depend and Poise.

The most recent launch news is a totally new product called Poise Impressa which we had in test market in Kansas City and this is a product that actually helps prevent bladder leakage. And so it’s a new space and we're going to be investing behind that in the later part of the year.

On fem care again we talked about that a little bit earlier probably a little bit more competitive promotion activity in the quarter I think we are down about a point year-on-year and pretty flat sequentially on share, but some of it is the categories more competitors some of it we’re going to make sure we're doing all the right things to execute in that space.

So we’re making sure we got the right offer in the right messaging to drive that category..

Thanks.

And then just a follow-up on China, can you help us scale how important that business is to you because it’s been growing so fast for so long it wasn’t necessarily disproportionately large within the whole business Brazil was generally your biggest market can you help us just understand the key drivers of EM?.

Brazil still the biggest at about $1 billon and China is gaining fast. So it’s what Paul probably 3% of sales something like that..

Yeah. China was 3% in the full year of last year and it’s going to be a bigger percentage this year..

Thanks so much..

Thanks..

Thank you for your question. [Operator Instructions] The next question will come from Christ Ferrara with Wells Fargo. Please go ahead..

Hey, good morning guys..

Good morning Chris..

Good morning. Wanted to dig a little bit more into I guess the specifics around U.S.

volume, so it sounds like you guys in the press release you called out volume being down slightly in adult child and diapers and I guess specifically diapers the gap there with Nielsen is really wide right, so Nielsen showing something like mid-single-digits volume increases during those months then you have Unilever this morning talking destalking in the U.S.

so I am wondering can you reconcile that a little bit I know it’s Nielsen, but the volume piece specifically I guess?.

Yeah I mean as we would look at the - Ali asked this question a little bit earlier, as we would look at the U.S. diaper category in the quarter we’d say looking at everything that we can see and from a consumption standpoint shelf off take was probably plus 1 and our volume was minus 1 on diaper.

And so there is a little bit of inventory change some of it also has to do with that we shift some of the promotional activity in March for some of the snug and dry re-launch that that would up selling through in the second quarter. And so I would say we’re about on track with our expectations from that standpoint.

And our stuff typically is pretty high queue, pretty high velocity. So there is usually not very large inventory swings. So we wouldn’t typically see a big destocking effect..

Okay, great. And then can we talk about the incremental brand, I mean I guess that’s above and beyond what you’d expected I think you sort of framed it around continued optimism around growth opportunity.

So I guess can you talk about how much of that incremental brand investment you expect to be in the form of pricing right, which kind of came up a little over this quarter versus advertising behind initiatives?.

Yeah.

I think the way I would think about it is yeah we’re little bit ahead of our plan so far this year and we want to make sure we deliver the plan, but we also if we have the opportunity to invest more in innovation or in some of our key markets where we’ve got good growth opportunities in a strategic way we’re going to look for opportunities to do that in the back half and maybe more than we have in past years, which is a great opportunity for our teams to be whether they’re thinking about where do I cut programming to make the year we’re looking at and we fully funded here the things that we can do to increase our investment.

So, where we’ve had good innovation, where we’ve god market momentum those would be the kind of places that we’d been asking those questions it would be much more strategic front, but I’d say advertising as part of it, digital coupon I guess another part some of that stuff might wind up as a reduction of sales if it’s a digital coupon, but it’s going to be more strategic rather than any kind of price cutting..

And just to be clear you guys have considered this more offensive than defensive relative to competition?.

Yeah. I think in general yeah, you want to make sure if you have competitive threats in markets though that you are fully defending. So we’ve mentioned that the China diaper - with the right offer and [indiscernible]. So I think there is an element where you plan to offence and you also want to make sure you’re fully competitive..

Got it. Thanks a lot..

Thanks Chris..

Thank you for your question. The next question will come from Olivia Tong with Bank of America. Please go ahead..

Good morning Olivia..

Good morning.

How are you?.

Pretty good..

Good. So first question, just want to dig a little bit deeper into the earnings outlook because you raise your expectations on commodities enforced by let’s call about $100 million cumulatively. And clearly that’s slightly offset by the slight uptick in currency pressure, but it doesn’t seem to be flowing fully through to your earnings outlook.

So is it a function some of the incremental brand investment that you just refer to? So or is it another thing so maybe can you talk through some of the puts and takes that offset some of the positives on the expense line to start?.

Yeah, that’s the right way to think about it. We took the guidance up, the bottom end of the range up a nickel and that's part of it.

We had better - a little bit better commodities we expected a little bit worst currency than we expected and then we took FORCE cost savings are tracking ahead of plan and we’re investing some of that strategically in key markets and products in the back half of the year.

So you get the right elements and the mix of that is what translates into the guidance..

Got it thank you.

And then just two follow-up questions, first on North American diapers, is Huggies spending right now fully rolled out and as you think about sort of rebuilding share at the low end how concern are you about the competitive environment at the entry level price points given where commodities are right now? And how do you think about the price volume mix? How do you think that looks going forward? And then just overall on the promotional environment which you referenced a couple of times already, but how is the competitive environment looking right now overall? I mean we talked a little bit about North American consumer tissue, but just to reassume your thoughts on the overall basis as well? Thanks so much..

Sure. Yeah on diapers I mean, I think the near-term commodity weakness isn't resulting in any significant price movement and if you kind of look at over the last couple of years we’ve had pretty good amount of commodity increases, but there was no price recovery for us.

So if you looked at the net-net of it we are still even though the deflation we’re going to have this year is less than the inflation we had last year that we didn't get any pricing for. So I would say in the range that we are in I don't think it's going to move price significantly.

I also think the consumer is in the stronger position than they were a year ago. And so we want to make sure that we get the right offer and that we get a very good performing product at a competitive price in the market place, which is sort of in the heritage of Huggies for many years and we’re really making sure we stay true to that.

In terms of the competitive environment, if you look all over the world there is plenty of people that get up every morning wanting to take your business.

And so we look at the Japanese competitors, [indiscernible] are quite aggressive local Chinese competitors like [indiscernible] are aggressive, we got local competitors in Latin America with CMPC and then SCA is popping up in lots of places. So and obviously P&G is a formidable global competitor as well.

So we know we've got to be moving pretty fast every day to bring right innovation to execute well in the market to continue to deliver on our business plans and our teams are up for that challenge..

Thank you..

Thank you for the question. [Operator Instructions] The next question will come from Lauren Lieberman with Barclays. Please go ahead..

Thanks, good morning..

Familiar with Barclays it’s great..

Actually this is Lieberman regardless. Can you talk a little bit again sorry to beat a dead horse, but just on fem care at least in the Nielsen data, it looks like private label has actually been gaining some ground.

So when you are talking about kind of making sure you have the right offerings and revisiting market again and so is it primarily what you are seeing day to day as well the private label is the really the one kind of making some inroads?.

Finally the shares are up a little bit I'm just kind of looking at the share data. But it's.... I don't know if you get it Paul..

About a point..

About a point. But I would say it's been more the competitive price points from some of those smaller players in the market that has been making some noise, as we’ve last year consolidated our everything under the U by Kotex name and that execution went pretty well.

But we still think with that we can do even better in terms of how we merchandise that in store and make sure we’ve got the right product and right offer. Our super-premium our U by Kotex line was a little slower growth this quarter and so that's one that we are really focusing on and make sure we got the right innovation messaging there.

And so again some of it’s the category and some of it is we probably say we can do better on the innovation and execution front..

Okay.

And as you are thinking about the reinvestment dollars the back half of the year and even further beyond, how much of that mix is skewing online social et cetera? Particularly I think about things like where to reach people entering the fen care category, what you'll be doing with Impressa going forward and what’s your kind of learning trajectory on how to do online best?.

That's a great question, and that’s something that we’re spending a lot of time on and so we’ve got lots of digital marketing work going on all over the world and are trying to make sure we’re investing in that capability in each individual market and then where we find something that work to share best practices at a faster pace.

And so I think that’s something that every CPG out there is doing. And particularly in the target market of fem care for late teen girls I mean they are very connected in their social experience and we want to make sure that we’re relevant there.

So for example in China with our re-launch of our Kotex brand there it’s been nearly 100% digital marketing really almost no network TV in that space just because of the importance of that channel that consumer.

And so we’ve had some real successes and we’ve also learn some things along the way of what not to do and but we’ve got a lot of good work going on in that space..

When did Kotex re-launch in China?.

We launch that it was like early last year or late ‘13?.

Yes..

Late ‘13 I think was the first shipment that really kind of sort hit strides in ‘14..

Okay.

And then in - fem care in Brazil couple of times today, so was there also a re-launch for Kotex in Brazil?.

Yeah. Our brand there is Intimus like Kotex which is a brand that we acquired, but we’re upgrading that with some of the global innovation that we’ve done in other markets along the lines of the U by Kotex things that we’ve done in the U.S.

and seeing a very good response when we picked up brand leadership in Brazil in fem care for the first time in the long time and have good momentum going in that market..

Okay, great. Last details is it branding on end product in terms of you by Kotex carry over in the U.S.

or is it just sort of the product itself?.

It’s more of the product itself and it’s actually it’s more of a global innovation a lot of the stuff that U.S. guys are launching that was invented in Korea or China or elsewhere and so that global team is probably doing the best job of any that we have of driving an idea consistently around the world.

Five years ago probably would have been our most disapproved product form everywhere and today we’re all on went roughly the same product chasse we’re trying to take that learning and do it other areas so some of the things we’re doing on diaper pants and baby wipes are tapping into that where our local teams still have local optimization, but we’re able to drive a more consistent message around the world..

Okay. So, thanks so much..

Thanks, Lauren..

Thank you for your questions. [Operator Instructions].

Alright. Since we have no more questions on the line we thank you for your interest today and we’ll close with the comment from Tom..

Once again a good quarter of top and bottom line results and good execution by the team and we really appreciate your interest and support in Kimberly-Clark. Thanks very much..

Thank you..

Thank you ladies and gentlemen. This concludes today’s conference. You may now disconnect your lines. Have a wonderful evening..