Sign in

    Kimberly-Clark Corp (KMB)

    Q4 2024 Earnings Summary

    Reported on Feb 13, 2025 (Before Market Open)
    Pre-Earnings Price$131.41Last close (Jan 27, 2025)
    Post-Earnings Price$131.60Open (Jan 28, 2025)
    Price Change
    $0.19(+0.14%)
    • Kimberly-Clark expects volume and mix-driven growth in 2025, aiming to grow ahead of the categories in which they compete, supported by innovation-led growth, strong brand investments, and a focus on gaining market share in key markets like the U.S. and China. , ,
    • The company's strong productivity initiatives are expected to continue driving margin expansion in 2025, with projected productivity savings of around 5%. Additionally, SG&A savings from the Powering Care program are expected to begin contributing materially, supporting operating margin growth ahead of gross margins. , ,
    • The 'Powering Care' transformation strategy and the reorganization into three segments are enabling Kimberly-Clark to better leverage scale, move faster in implementing their global growth playbook, and bring superior propositions to market more quickly, leading to improved performance and efficiency gains. , ,
    • Economic pressures in Latin America and Southeast Asia are leading to lower product usage frequency, particularly in countries with informal economies. Consumers are using fewer products, such as diapers per day, due to toughening economic conditions, which could negatively impact sales volumes in those regions.
    • Gross margin expansion is expected to slow down in 2025 compared to prior years, due to lower productivity gains and flat pricing. Kimberly-Clark projects gross margin to expand at a slower pace than in 2023 and 2024, partly because they expect productivity gains to be lower than the 5.9% achieved in 2024.
    • Relying solely on volume and mix-driven growth without pricing contribution in 2025 could be challenging, especially as the company laps a strong first quarter from the prior year and faces potential headwinds in some markets. With pricing expected to be largely flat and minimal contribution from hyperinflationary economies, achieving growth targets might be difficult in a low-growth environment.
    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Gross margin

    FY 2025

    no prior guidance

    Expected to expand in FY 2025, but at a slower pace than in 2023 and 2024.

    no prior guidance

    Operating margin

    FY 2025

    no prior guidance

    Projected to grow ahead of gross margin in FY 2025.

    no prior guidance

    Productivity

    FY 2025

    no prior guidance

    Expected to be in the 5% range, slightly lower than the 5.9% achieved in FY 2024.

    no prior guidance

    Pricing

    FY 2025

    no prior guidance

    Largely flat in FY 2025, with minimal contribution from hyperinflationary markets.

    no prior guidance

    Volume and mix

    FY 2025

    no prior guidance

    Growth in FY 2025 with continued market share gains anticipated.

    no prior guidance

    Revenue & sales

    FY 2025

    no prior guidance

    Expected to be evenly distributed between first and second half of FY 2025.

    no prior guidance

    Cost expectations

    FY 2025

    no prior guidance

    Around $200 million in aggregate, similar to FY 2024 levels.

    no prior guidance

    PNOC (Pricing Net of Cost)

    FY 2025

    no prior guidance

    Managed to at least neutral in FY 2025.

    no prior guidance

    MetricPeriodGuidanceActualPerformance
    Organic Growth
    FY 2024
    Closer to 3%
    Approximately -0.8% year-over-year for Q4 (from 4,970 millionIn Q4 2023 to 4,928 millionIn Q4 2024)
    Missed
    Gross Margin
    FY 2024
    Averaging around 37%
    ~35.8% for the full year, calculated from Q1, Q2, Q3, and Q4Results
    Missed
    Advertising and Brand Support
    Q4 2024
    Increase by at least 60 bps year-over-year
    Increased ~11.7% (from 993 millionIn Q4 2023 to 1,109 million)
    Beat
    TopicPrevious MentionsCurrent PeriodTrend

    Volume and mix-driven growth

    Emphasized in Q1–Q3 2024 as the shift away from pricing continued

    Remains key for 2025, with pricing largely flat and volume/mix as main drivers

    Consistent. Central growth strategy across all periods.

    Innovation-led growth

    Highlighted in Q1–Q3 2024 as a core component for market share gains and category expansion

    Major focus to drive premiumization and brand differentiation

    Stable. Continues to see bullish emphasis and investment.

    Strong brand investments

    Increasing ad intensity since Q1 2024 (beyond 6% of sales) to bolster brand equity

    Maintained ~6.5% ad spend, up ~$250M vs. 2023, supporting volume/mix gains

    Consistent. Ongoing commitment to drive brand equity and share.

    Gaining market share in key markets

    Achieved progress in Q1–Q3, with improved share across multiple categories in U.S., China, and other key markets

    Expanded shares in the U.S. and China (e.g., diapers up in both regions)

    Momentum. Strong innovation and brand investments fueling share growth.

    Productivity initiatives and cost savings

    Drove significant cost savings in Q1–Q3, enabling reinvestment in innovation and brand building

    Delivered 5.9% productivity gains, targeting $200M SG&A savings under Powering Care

    Accelerating. Sustained cost discipline to fund growth.

    Reorganization into three segments

    Discussed in Q3, with partial interim structures in Q2; no mention in Q1

    Completed Oct 1, aiming for ~$200M SG&A savings; part of Powering Care

    Recently implemented. Expected to streamline operations and boost agility.

    Shifting pricing dynamics

    Pricing contribution declined steadily from Q1 to Q3 2024

    Pricing to remain flat in 2025; volume/mix to drive growth

    Reduced emphasis on pricing; pivoting to volume and mix.

    Softness in emerging markets

    Recent mention in Q3; limited discussion in earlier quarters

    Noted lower product usage in Latin America, Southeast Asia due to economic strains

    Recent concern. Challenges in informal economies hamper usage frequency.

    Exiting or reducing private label

    Mentioned in Q3 and Q1 (halving private label sales), not specifically in Q2

    Exiting additional private label contracts to focus on branded categories

    Ongoing. Portfolio shift to higher-margin branded businesses.

    Gross margin expansion goals (~40%)

    Target restated in Q3; no reference in Q2 or Q1

    No direct mention of 40% target; slower GM expansion pace into 2025

    Not mentioned in Q4, but remains a long-term objective.

    Economic pressures affecting usage frequency

    Discussed in Q3; partial Q1 reference to limited trade-down

    Cited daily-wage consumers cutting usage in emerging markets due to tight budgets

    Ongoing. Heightened impact in markets with lower consumer resilience.

    Aging population tailwind for adult care

    Mentioned in Q3; not in Q2 or Q1

    Seen as a key growth driver in developed markets (U.S., China, S. Korea)

    Positive. Demographics continue to support adult care demand.

    Declining birth rates in China

    Discussed in Q3 and Q1; no mention in Q2

    Signs of positive birth trend in Q3–Q4, potentially aiding diapers

    Potential rebound. Could reverse diaper category headwinds.

    Personal protective equipment divestiture

    Mentioned in Q2 and Q1 (profit headwinds), no Q3 reference

    Exited PPE business as part of broader portfolio optimization

    Continued exit. Streamlining operations for strategic focus.

    1. 2025 Growth Outlook and Pricing Strategy
      Q: Can you update us on your progress with organizational changes and outlook for 2025 growth, particularly regarding pricing vs. volume?
      A: Michael Hsu expressed confidence in the setup for 2025 and the long term, with categories exhibiting durable growth. They anticipate 2%-3% volume and mix growth over the long term, focusing on volume and mix-driven growth rather than pricing, which is expected to be largely flat in 2025. Nelson added that pricing will be muted, with growth driven by volume and mix, building on 2024's volume and share gains.

    2. Productivity Savings and Impact on Margins
      Q: Did productivity savings in 2024 help offset rising input costs, and can you discuss the impact on margins for 2025?
      A: Nelson noted they delivered historically high productivity savings of 5.9% in 2024, and expect around 5% in 2025. These savings didn't directly offset pulp costs, but they manage commodity costs proactively. Productivity contributes to margin expansion, with gross margins expected to expand in 2025, albeit at a slower pace than prior years due to muted pricing and supply chain investments.

    3. Gross Margin and Operating Margin Expectations
      Q: What are your gross margin expectations for 2025, and how will this affect operating margins and investment levels?
      A: Gross margins are expected to expand in 2025, but at a slower pace than the 200 basis point expansion in 2024. This is due to muted pricing contributions and investments in supply chain optimization and automation. Operating margins are anticipated to grow faster than gross margins, driven by significant SG&A savings from the Powering Care program, amounting to $200 million over two years.

    4. Volume Growth Beyond U.S. and China
      Q: When can we expect volume growth from markets beyond the U.S. and China, and are there changes in competitive dynamics?
      A: Michael Hsu acknowledged that while progress in the U.S. and China is strong, they are also seeing share gains in other markets, including the UK, Australia, Indonesia, and South Korea. The new operating model aims to leverage global scale and share best practices faster across markets, helping drive growth beyond the U.S. and China.

    5. SG&A Savings and Impact on Profit Growth
      Q: Can you provide more detail on SG&A productivity savings and confidence in achieving them without reducing investments?
      A: Michael Hsu stated they are comfortable with current marketing investment levels, having doubled advertising spend since 2018. Under the new Chief Growth Officer, they aim to improve creative and efficiency, planning similar spend levels in 2025. Nelson explained they plan $200 million in SG&A savings over two years through the Powering Care program, with organizational changes already in place. These savings will contribute to operating margin expansion faster than gross margin growth.

    6. Consumer Behavior Impact on Demand
      Q: Can you elaborate on the lower frequency of product use due to consumer pressures in certain markets?
      A: Michael Hsu explained that in economies where workers are paid daily, economic pressures lead consumers to reduce usage frequency (e.g., using fewer diapers per day) rather than exiting categories. This behavior is currently observed in pockets of Latin America and Southeast Asia, and teams are working through it.

    7. Phasing of 2025 Results and Outlook
      Q: Could you provide insights on the phasing of 2025 results and any cushion in your outlook for external variables?
      A: Nelson indicated that sales and profits are expected to be evenly distributed between the first and second halves of 2025. Growth will be volume and mix-driven across the year, with less than a 40 basis point tailwind from inventory changes compared to 2024. They have accounted for factors like lapping a strong Q1 2024 base and anticipate manageable costs.

    8. Selective Investment and Market Exits
      Q: Are there other markets where you might exit or be selective about investment?
      A: Michael Hsu noted they are being disciplined about markets where they invest, having exited Nigeria and Bolivia. They continue to ensure all categories contribute to growth and returns, optimizing participation where necessary.