Weekly Personal Care Review: Procter & Gamble, Unilever and Kimberly-Clark

Shares of global personal care majors Procter & Gamble (NYSE: PG), Unilever (NYSE: UL) and Kimberly-Clark (NYSE: KMB) remained subdued on the markets during the week ended February 13th. Shares of P&G remained flat Monday through Thursday, while those of Unilever and Kimberly-Clark gained 1% each. Similarly, the Dow Jones U.S. Personal Products Index rose by 1% over the week, while the broader S&P 500 index gained 2%.

In this report, we will review some of the key updates in the personal care industry. During the week, each of the above three companies released new innovations in their product-lines. Additionally, Procter & Gamble also announced expansion of its manufacturing facilities in the U.S.

See our complete analysis here: Procter & Gamble | Unilever | Kimberly-Clark

Procter & Gamble

P&G’s shares declined by 1% on February 9, but recovered from the fall in bits and pieces over the rest of the week. P&G’s shares had fallen by 6% in the aftermath of disappointing second quarter results, which it reported on January 27th (Read: Falling Volumes Compound P&G’s Problems as Currency Headwinds Dampen Q2 Results). However, its shares have since recovered and currently stand at $86.03. This is still 8% lower than its 52-week high of $93.89, which it had touched on December 24th.

During the week ended February 13th, P&G announced plans to build a $500 million multi-category manufacturing facility in West Virgina. ^[1] The facility, expected to open in 2017, will be one of the most advanced and sustainable plants in its global manufacturing and supply chain. The new plant is part of the company’s ongoing redesign of its North American supply chain. It will be spread over more than a million square-foot and will manufacture multiple brands.

P&G also announced its plans to develop a 50-megawatt biomass plant with Constellation, a subsidiary of Exelon Corporation. ^[2] Constellation will build, own and operate the $200 million co-generation plant, which will supply steam to P&G’s Albany, Ga., paper manufacturing facility and generate electricity for the local utility, Georgia Power. This new arrangement will replace P&G’s aging boiler and will help the company move closer to its 2020 goal of obtaining 30 percent of its total energy from renewable sources.

Meanwhile, the week also saw the introduction of new innovations to P&G’s Bounty paper towels line and in the Crest toothpaste brand. The new Bounty with Dawn is infused with the functionality of a dish detergent, in collaboration with P&G’s Dawn soap brand. ^[3] On the other hand, the new Crest Pro-Health is a two-step oral care product that uses a cleanser and a “perfecting gel”. ^[4] These new products continue P&G’s track record of continuous innovation to drive volume growth amidst a sub-par macroeconomic scenario.

Lastly, P&G appointed Francis S. Blake, former Chairman of the Board and Chief Executive Officer of The Home Depot, Inc. to its board of directors with effect from February 10. ^[5] He will serve on the Audit and Governance & Public Responsibility committees of the Board.

We have a price estimate of $83 for P&G, which is slightly lower than its current market price.

Unilever

Unilever’s shares remained flat Monday through Wednesday but gained 1% on Thursday to close at $43.20. Its shares have declined by 3% since the release of its fourth quarter and full year earnings on January 29th, despite posting strong results (Read: Higher Volumes Help Colgate-Palmolive Beat Currency Troubles in Q4).

According to reports, Unilever recently entered into a global licensing agreement to expand the market reach of its TIGI Cosmetics professional salon brand. TIGI, which is owned by Unilever, has chosen Naterra International for increasing the marketing and distribution of the US-based brand. Naterra and TIGI will collaborate on the development, design and distribution of the popular cosmetic line. ^[6]

Cosmetics fall under Unilever’s Skin & Hair Care division, which accounts for over a quarter of the company’s total revenues. Although Unilever does not report revenues from cosmetics separately, revenues from its Skin & Hair Care division are estimated to have decelerated by 13% in 2014 largely due to strong foreign currency headwinds.

We have a price estimate of $83 for Unilever, which is close to its current market price.

Kimberly-Clark

Kimberly-Clark’s shares fluctuated insignificantly during the week ended February 13 and ultimately closed with a weekly gain of 1%. Its shares were trading at a 52-week high of $119.01 immediately prior to the release of fourth quarter and full year earnings. However, disappointing performance along with a bleak outlook for 2015 (Read: Kimberly-Clark’s Revenues Hammered by Currency Headwinds, Finds Solace in Cost Savings) caused its shares to plummet by 9% in the next few days following the earnings announcement. Its shares have since recovered slightly in the last two weeks and are currently trading at $110.18.

During the week ended February 13th, Kimberly-Clark released a complete makeover for its toilet tissue brand, Andrex. ^[7] The overhauled brand has been given an updated packaging and the new version will be rolled out over the next two months. This follows the simplification of the Andrex brand by discontinuing a number of variants, so that only 5 core dry and moist product variants remain. The design refresh is part of an ongoing £60 million investment from Kimberly-Clark designed with consumers in mind.

We have a price estimate of $83 for Kimberly-Clark, which is slightly lower than its current market price.

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More Trefis Research

1. P&G Announces Next Step in North American Supply Chain Re-Design, P&G Press Release, February 10, 2015 [↩]
2. Procter & Gamble and Constellation Announce One of Nation’s Largest Biomass Renewable Energy Plants, P&G Press Release, February 12 [↩]
3. P&G Press Release, February 10, 2015 [↩]
4. P&G Press Release, February 12, 2015 [↩]
5. Procter & Gamble Announces Appointment of Director, P&G Press Release, February 10, 2015 [↩]
6. Unilever and Naterra Partner for TIGI Cosmetics, CNBC, February 10, 2015 [↩]
7. Andrex reveals brand refresh, Talking Retail, February 6, 2014 [↩]