Kimberly-Clark is expanding its Brazilian operations to create an innovation hub and export center for the Latin American region, according to media reports. The U.S.-based company has been investing in capacity expansion equipment in Brazil since 2020. Efforts have included the installation of new technologies and the construction of an increasingly local raw material supply network. It also foresees sustainability targets such as using 25% recycled plastics in packaging and reducing non-renewable fibers by 50%. The investment totals $120 million, one-third of which will be done this year.

“Brazil is our most important market in Latin America. It is one pillar of the company’s organic growth,” says Gonzalo Uribe, chief executive for Latin America.

Brazil is one of Kimberly-Clark’s 10 largest operations worldwide, with 4000 employees. In the first quarter, sales of the Brazilian operation grew by double digits. Globally, the sales of the U.S-based multinational grew 7% year over year, to $5.09 billion, but operating income fell 10%, the same contraction as net income, which stood at $535 million.

“Margins are typically lower in the first quarter, but they are starting to show some recovery,” says Uribe. “The cost of goods sold was 13% higher in the quarter, but, according to him, analyses and data point to an improvement this year.

Thanks to recent investments, K-C’s Suzano, Brazil plant can produce 200 million diapers per month. Additionally, automated production of wet wipes began at the site. These units serve markets in Chile, Peru, Bolivia and Argentina, in addition to Brazil.

Additionally, the company’s other two Brazilian plants—in Mogi das Cruzes and Camacari, will expand production of the Intimus feminine care brand to initially serve Brazil, Chile and Peru.