Kimberly-Clark Echoes Greenpeace

Kimberly-Clark Corp. (KMB - Analyst Report) recently announced that it has joined hands with Greenpeace to conserve forests. The company would now purchase wood fiber from eco-friendly sources. In its turn, Greenpeace ended the ‘Kleercut’ campaign, which it had begun against the company in Nov. 2004.

Kimberly-Clark is the largest manufacturer of tissue products, including the Kleenex, Cottonelle and Scott brands. The company used to purchase virgin fiber from logging companies. Greenpeace claimed that the fiber was derived from wood pulp from old growth forests in Canada and the United States, which endangered wildlife.

The company announced the setting of high norms and standards for the purchase of wood fiber and aimed at obtaining 100% of its requirement from eco-friendly sources. This will not only increase forest conservation but also enhance the use of Forest Stewardship Council (FSC) certified fiber and recycled fiber. Kimberly-Clark claims that by the end 2011, 40% of its North American tissue fiber (an estimated 600,000 tons) will be either recycled or certified by the FSC.

Kimberly-Clark sells paper-based consumer and medical products in more than 150 countries. The weak economic environment, especially in North America and Europe, negatively impacted its top-line growth. Three of the four operating divisions experienced revenue declines – Personal Care (down 2.0%), Consumer Tissue (down 8.0%) and K-C Professional & Other Products (down 12.4%), while the Health Care segment increased 9.5% year over year.

We have an Outperform recommendation on the stock.