Kimberly-Clark de Mexico (KCM) As Eight Production Facilities And An Extensive In-House Distribution Network
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Kimberly-Clark de Mexico (KCM) is Mexico’s leading manufacturer and marketer of tissue products for consumers, institutions and health care. KCM commands leading market shares of more than 60% in most of its consumer product lines. KCM is 47.9% owned by US Kimberly-Clark Corp.
Familiarity with high inflation
Latin American consumers are historically more accepting and familiar with high inflation which featured across the global economy in 2022. While companies in DMs report consumers “trending down” to generic or value products, there is no evidence of this phenomenon in Latin America, as reflected in the resilient performance of consumer staples companies in the region relative to those in DM.
An additional feature of the Fast Moving Consumer Goods (FMCG) market in Latin America is the proximity to sources of soft commodities. Sugar, pulp and paper, and soya are produced domestically in the region and are key inputs to consumer food products. Combined with low energy costs from hydroelectricity in the region’s largest food producer, Brazil, the environment for FMCG companies is a positive one, as reflected in the high margins regional consumer staples companies achieve.
Catalysts are in place for continued market performance
Latin America’s abundant natural resources, a growing population, and proximity to the vast American consumer market represent an attractive investment opportunity for investors.
Supplying the renewable energy revolution, nearshoring and consumption are three investment themes we have identified. Elevated commodity prices and the changing nature of supply chains are the catalysts to unlock these long-term themes, in our view, which we believe will be persistent.
Combined with below average valuations and above average return on capital, we believe there is the opportunity for Latin American markets to continue to perform well.
