Kimberly-Clark Corp.

The stable outlook reflects our expectation for Kimberly-Clark to generate mid- to high-single-digit EBITDA growth over the next couple of years through cost savings activities and return substantially all free cash flow to shareholders. We expect this will keep long-term leverage slightly below 2x. We could lower the rating if adjusted debt to EBITDA consistently exceeds the low-2x area. This could occur if the company adopts a more aggressive financial policy, including increasing share repurchases above our expectations or--while less likely--making large acquisitions. We could also lower the rating if the company is unwilling to reduce share repurchases in the event of extended profit deterioration, which could occur if commodity costs or currency headwinds escalate, competition intensifies, or the global

...Solid organic top-line growth in 2019 will likely moderate as the company laps price increases.Kimberly-Clark Corp. raised prices across many product categories and geographies over the course of 2019 and volumes held up better than we expected. This has helped the company deliver solid organic sales and profit growth (excluding restructuring program charges). Profitability has been further boosted by moderating commodity inflation, particularly with respect to pulp. However, the good organic sales growth may not be sustainable. Because of more favorable pulp costs, we believe the company will have difficulty raising prices over the next year, and we expect it will continue to be challenged by the generally low category growth and tough competition across most of its portfolio. If commodity prices continue to abate, the company could also face heightened pricing pressure from its competitors or its large retail customers could demand price concessions. Nevertheless, while this could lead...

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