KIMBERLY CLARK CORP (KMB)·Q2 2025 Earnings Summary

Executive Summary

• Q2 revenue $4.16B (-1.6% y/y), with organic sales +3.9% on +5.0% volumes; reported gross margin 35.0% and adjusted gross margin 36.9% (down 180 bps y/y) as price investments and tariffs offset strong productivity .
• Adjusted EPS attributable to Kimberly‑Clark was $1.92 (-2.0% y/y); adjusted EPS from continuing operations was $1.63 . Versus S&P Global consensus, revenue beat ($4.16B vs $4.07B*) while “Primary EPS” (aligned to adjusted continuing EPS) slightly missed ($1.63 vs $1.656*) .
• 2025 outlook raised: adjusted operating profit growth increased to low‑to‑mid single digits cc (from flat‑to‑positive), adjusted EPS growth to low‑to‑mid single digits cc; reported FX headwind to sales reduced to ~100 bps (from ~200 bps), FCF maintained at ~$2B .
• Management highlighted volume-led growth from innovation, disciplined PNOC (price net of commodities), and reduced 2025 tariff burden ($170M gross, ~$50M mitigations) vs ~$300M estimated in April—key sentiment catalysts alongside the JV progress for International Family Care (IFP) .

Note: S&P Global estimates marked with an asterisk (*) and sourced from S&P Global.

What Went Well and What Went Wrong

• What Went Well

  • Volume-led top-line: organic sales +3.9% on +5.0% volumes; North America brand consumption +4.5%, with near double‑digit in Adult Care, and NA Personal Care weighted share +60 bps .
  • Innovation/activation engine: CEO called it “one of the strongest” quarters in recent history; 85% of 1H organic sales driven by innovation; in‑house, AI‑enabled creative capabilities accelerating brand performance (Cannes awards, China AI ads) .
  • Productivity and cost discipline: continued industry‑leading productivity; SG&A savings under Powering Care tracking; 2Q gross margin headwinds partially offset by productivity .
  • Outlook raised and tariff headwind reduced: OP and EPS growth (cc) raised; tariff gross impact updated to ~$170M (from $300M) with ~$50M offsets .

• What Went Wrong

  • Margin pressure: adjusted gross margin 36.9% down 180 bps y/y on negative pricing net of cost inflation and incremental tariff costs despite productivity gains .
  • International Personal Care (IPC) profit down: IPC operating profit $182M (-12.9% y/y) amid price‑value tier investments and currency headwinds .
  • Equity income lower and higher tax rate: equity income $47M (vs $63M) on FX; adjusted ETR 20.9% (vs 20.4%) with reported ETR up to 22.6% .

Financial Results

Q2 vs consensus summary:

• Revenue: $4.16B vs $4.07B* → Beat .
• Primary EPS (proxy for adjusted continuing EPS): $1.63 vs $1.656* → Slight miss .

Segment performance (Q2):

KPIs and cash/returns:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “This was a very active quarter and one of the strongest in our recent history… We delivered strong organic sales growth, fueled by the highest volume growth we’ve achieved in five years.” — Mike Hsu, CEO .
• “We are aiming to be at the top end of the 5% to 6% range in gross productivity… strong progress on the $200 million SG&A overhead savings.” — Management on productivity and cost program .
• “Our approach is that PNOC… has to be zero or greater… promotional intensity… below the category average.” — CEO on pricing/promo discipline .

Q&A Highlights

• Volume vs pricing: Emphasis on volume/mix-led growth with PNOC ≥ 0; promo used tactically, not to drive category size; confidence in pricing power where needed .
• North America momentum and data reconciliation: 4.5% branded consumption growth; shipment/consumption timing driven by inventory dynamics and innovation pipeline build; comps to be noisy (hurricane/port strike effects) .
• Outlook bridge: Raised OP/EPS growth reflects lower net tariff headwind (~$170M gross, $50M offsets), favorable currency vs April, and D&A cessation on discontinued ops ($0.16 EPS for FY) while stepping up brand support to ~7% of sales in 2H .
• International cadence: Strength in China; some frequency pressure in LatAm informal economies; continued portfolio price‑value upgrades .

Estimates Context

• Q2 2025 vs S&P Global consensus: Revenue $4.163B vs $4.073B* (Beat); Primary EPS $1.63 vs $1.6555* (Slight miss) .
• Prior quarters (for trend): Q1 2025 Primary EPS actual 1.93 vs 1.891*; Q4 2024 Primary EPS actual 1.50 vs 1.514*; revenue actuals vs consensus available above (note base definitional changes beginning Q2 as IFP moved to discontinued operations) (Values retrieved from S&P Global).

Key Takeaways for Investors

• Raised 2025 OP/EPS (cc) with improved FX and a meaningfully lower tariff drag should support estimate stability to upside, contingent on sustained volume momentum .
• Q2 was volume‑driven with innovation and share gains—credible pathway to the long‑term margin milestones (≥40% gross; ≥18–20% OP margin by 2030) reaffirmed on the call .
• Mix of price investments and tariffs pressured gross margin; productivity and SG&A savings offset a portion—watch cadence of margin repair as pricing actions and cost mitigations flow through .
• North America consumption healthy; inventory/phasing creates quarterly noise—expect clearer read‑through by Q3 given easier comps and hurricane lap .
• IPC profit softness persists due to price‑value tiering and FX; execution on portfolio value propositions and currency stabilization are levers to watch .
• EPS mechanics: D&A cessation on discontinued ops (~$0.16 FY) and lower equity income (FX) are non‑operating swing factors; model with care .
• Capital allocation steady: FCF ≈$2B, ongoing dividends and buybacks; total debt modestly down YTD .

---

Additional detail and citations

• Second‑quarter revenue, gross margin, EPS and segment data: .
• Organic growth and drivers: .
• Cash flow, capex, leverage, shareholder returns: .
• Outlook evolution vs April: vs .
• Call commentary (pricing/PNOC, tariffs, productivity, innovation/AI, regional trends): .

S&P Global estimates disclaimer: All values marked with an asterisk (*) are retrieved from S&P Global.