Kimberly-Clark to Cut Wood Usage

The maker of Kleenex tissues Kimberly-Clark Corporation ( KMB - Analyst Report ) has committed to reducing its Forest Fiber Footprint, by substituting about 50% of wood fiber taken from natural forests to alternate fiber sources by 2025.

As an alternative, Kimberly-Clark will explore other high-potential fiber, such as bamboo and wheat straw for its products to meet consumer expectations. The company has already launched Andrex Eco bath tissue in U.K., which contains 10% bamboo and 90% recycled fiber. Moreover, the company’s segment K-C Professional is testing marketing tissue products in North America, made with alternative fibers including wheat straw and bamboo.

This initiative by Kimberly-Clark will not only save the world’s forest resources and ensure minimum use of wood fiber, but will also shield the company from volatile price fluctuations in the world fiber market. With this initiative, Kimberly-Clark will be able to save about 375,000 metric tons of primary wood fiber, which it had sourced from natural forests in 2011 and which can produce more than 3.5 billion rolls of toilet paper.

Our Recommendation

Kimberly-Clark competes with Procter & Gamble Co. ( PG - Analyst Report ) and currently holds a Zacks #3 Rank (a short-term ‘Hold’ rating). Over the long term, we provide a Neutral recommendation on the stock.

We are encouraged by the company’s leadership in several consumer products categories including diapers, paper goods, health care products, and female personal care. Moreover, Kimberly-Clark focuses on improving its products through innovation in order to remain competitive and drive growth. These innovations are expected to help in improving brand position and market share in the consumer categories, going forward.