Kimberly-Clark de México (KCM) has a reliable supply of virgin pulp from various suppliers, such as Georgia Pacific, Domtar, International Paper and Fibria, among many others.
The main price risk is related to movements in pulp and fiber prices for recycling.
To reduce this risk, the company has several strategies, including investment in paper recycling plants.
Approximately 60% of the pulp consumed by KCM at September 30, 2022 was regenerated.
Other strategies used include the use of different types of fiber and from different suppliers, as well as sourcing from different geographic regions and in some cases signing contracts.
KCM believes that there is no efficient market for financial hedging instruments for celluloses.
In general, pulp is a key raw material for KCM, which is a partially integrated producer in relation to this input by recycling imported and domestic secondary fibers.
KCM procures cellulose in international markets from various suppliers and is governed as a commodity.
While the company is not dependent on any one pulp supplier, it places special emphasis on promoting ethical practices in all aspects of its raw material procurement process.
Kimberly-Clark de México
Fiber or recycled paper is another source of pulp that KCM uses in its tissue paper manufacturing processes.
As mentioned, approximately 60% of the Company’s fiber consumption comes from recycled fiber. To take advantage of this fiber, KCM operates fiber recycling processes at its Bajío, Ecatepec and Ramos Arizpe mills.
This raw material is purchased in Mexico from suppliers such as Recycle, and Reciclables de Papel y Cartón, among others; and abroad (mainly in the United States) from firms such as International Paper, Harmon Recycling, and Waste Management, among others.
Fiber collection in Mexico is lower than in the United States, which means that KCM has to import part of its secondary fiber requirements.
The company seeks to maintain a balance between quality, price and performance characteristics in the face of changing supply and demand conditions.
Because KCM markets a significant number of products, it requires a wide variety of raw materials and finishing materials (packaging).
Cellulose, both softwood and hardwood, eucalyptus and recycled fibers are used mainly in the manufacture of tissue paper, and cellulose in particular is also used in the manufacture of disposable diapers, feminine protection products and incontinence products.
KCM financial results (pesos)
Polypropylenes and other synthetic and chemical materials are the main raw materials used in the manufacture of nonwoven fabrics, which are used in the manufacture of disposable diapers, training underpants, wet wipes, feminine protection products and incontinence products.
Absorbent materials are important components of disposable diapers, training underpants and incontinence products.