KMB's new direction, a program cleverly named FORCE (Focus on Reducing Costs Everywhere), is supposed to grow profits by reducing costs. Management and the board of directors are so enthralled over FORCE that some are emerging from their office caves and gathering in circles like excited Neanderthals who just discovered fire. But the major reason for FORCE is that Vanguard Group, which owns 30 million shares, and a committee of disappointed and prominent shareholders had “come to Jesus” meetings with management. And KMB's white-bread boys — fearful of losing their rich sinecures, their community status, their personal perks and their corporate jets — may have seen the light. Time will tell.
KMB is not just Huggies, Depends and other personal stuff. Its 53,107 employees also produce billions of dollars of medical devices, infection prevention products, operating room medical supplies, pain management systems, feeding systems, liquid and air filtration systems, and various supporting products. The consensus believes that revenues will grow 2 percent in 2013, to $21.4 billion, that earnings will increase 6 percent, from $5.22 to $5.58, and that the dividend will increase 4 percent, from $2.96 to $3.08, plus modest gains in the following years.
However, if Messrs. Falk, Buthman, Abernathy and Mielke (KMB's four hotshots) fail to deliver traction, these pretty boys and their sycophants may have to pay their own club dues at Preston Trails — because corporate rigor mortis may have set in after a decade of slovenly management. It may be too late. Morningstar seems to agree and gives KMB only two stars out of five.
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