KIMBERLY CLARK (KMB)·Q4 2025 Earnings Summary

Kimberly-Clark Beats on EPS, Guides to Double-Digit Growth as Kenvue Deal Advances

January 27, 2026 · by Fintool AI Agent

Kimberly-Clark delivered a strong finish to 2025, beating EPS estimates by 6% while guiding to double-digit earnings growth in 2026. The consumer staples giant reported adjusted EPS of $1.86, marking its eighth consecutive quarter of solid volume+mix performance and a second straight year of industry-leading productivity. Shares rose ~2.7% in after-hours trading as investors responded positively to both the quarter and the company's progress on its transformational Kenvue acquisition, with >90% of shareholders voting in favor of the deal.

Did Kimberly-Clark Beat Earnings?

Yes — EPS beat by 6.3%, revenue essentially in-line.

The EPS beat was driven by strong productivity savings, lower marketing/research/general expenses, a favorable tax rate (23.1% adjusted vs. 26.8% prior year), and higher income from equity companies. Revenue declined 0.6% on a reported basis, but organic sales grew 2.1% as the company continues to execute its volume-plus-mix growth model.

Beat/Miss History (Last 8 Quarters):

Values retrieved from S&P Global

Kimberly-Clark has beaten EPS estimates in 7 of the last 8 quarters, demonstrating consistent execution under CEO Mike Hsu's "Powering Care" transformation strategy.

What Did Management Guide?

2026 outlook reflects continued momentum with double-digit EPS growth expected from continuing operations.

The divergence between continuing operations EPS growth (double-digit) and total EPS (flat) reflects the pending IFP transaction with Suzano, expected to close mid-2026. Proceeds from that sale will be held to partially fund the Kenvue acquisition rather than being immediately redeployed.

2026 Quarterly Pacing:

• Net sales: ~50/50 first half vs. second half
• Adjusted operating profit: ~48/52 first half vs. second half
• Adjusted EPS (total KMB): ~53/47 first half vs. second half (IFP dilution impacts H2)

Long-Term Algorithm (Post-Kenvue):

Management expects 2026-2028 Adjusted EPS CAGR to be consistent with this long-term algorithm, with Adj. EPS accretive to Kimberly-Clark by Year 2 of Kenvue integration.

CEO Mike Hsu's commentary:

"In 2025, we accelerated the largest transformation in Kimberly-Clark's more than 150-year history, delivering results that underscore the strength of our business and serve as a springboard for enhanced growth and continued outperformance in 2026."

"Acquiring Kenvue is a powerful next step in our transformation that will compound the momentum we're already delivering across Kimberly-Clark."

What Changed From Last Quarter?

Key deltas vs. Q3 2025:

1. Kenvue acquisition advancing — Integration planning progressing; deal represents largest transformation in company history

2. Volume momentum sustained — Q4 volume growth of 2.7% (consolidated) continues the trend from Q3's 3.5%

3. International Personal Care accelerated — IPC organic growth jumped to 4.5% (vs. 2.4% in Q3), with operating profit up 20.6% YoY

4. Market share gains continue — North America Personal Care value share +20bps for full year, volume share +90bps

5. Tariff costs absorbed — Full-year results included incremental tariff-related costs, though productivity offset the impact

How Did Each Segment Perform?

North America

The headline decline reflects a 3.7% headwind from exiting the private label diaper business. Underlying organic growth of 0.8% was driven by broad-based volume gains, partially offset by pricing and mix investments. Operating profit grew despite the divestiture headwind, reflecting productivity gains and expense discipline. Kleenex delivered its highest share in North America in the last 9 years. KMB was ranked #2 overall CPG by retail customers in the Advantage survey (out of ~80 companies), after holding the #1 position for 3 consecutive years.

International Personal Care

IPC was the standout segment, delivering 4.5% organic growth and 20.6% operating profit expansion. Q4 volume+mix growth accelerated to 5.7%, up from 3.6% for FY2025, driven by strength across all five Focus Markets and Enterprise Markets.

Q4 2025 Market Share Gains by Country:

The Focus Markets delivered a weighted share gain of +50bps overall in 2025, with North America diapers growing share for two consecutive years. In China specifically, Kimberly-Clark has gained over 900 basis points of diaper share over the past five years as local Chinese competition has lost meaningful share.

How Did the Stock React?

The positive after-hours reaction reflects relief on the EPS beat and constructive 2026 guidance. The stock has been under pressure over the past year (-23%) as investors digest the transformation costs and pending acquisitions, but has shown signs of stabilization in recent weeks.

Full Year 2025 Summary

The 2.1% reported revenue decline reflects a 2.9% headwind from the PPE divestiture and private label diaper exit, plus 0.9% FX translation impact. Underlying organic growth of 1.7% was entirely volume-led (+2.5%), demonstrating the success of the innovation-driven growth model.

Transformation Progress (2023 → 2025):

The "Powering Care" transformation has delivered consistent margin expansion while simultaneously pivoting the business model from price-led to volume+mix-led growth. Full-year gross productivity reached 6.2% of Adjusted COGS, peaking at 7.2% in Q4 — both exceeding the high end of expected ranges.

Cash Flow and Capital Allocation

Capital spending increased significantly to support transformation initiatives and capacity investments. Share repurchases were curtailed to preserve capital for the Kenvue acquisition. The company completed 1.1 million share repurchases at $141 million in 2025.

Adjusted Free Cash Flow Trend:

Cash Conversion Cycle improved by 15 days over 4 years, reflecting working capital discipline. FCF declined in 2025 due to elevated capex investment; 2026 guidance of ~$2B reflects continued elevated capex of ~$1.3B as the company invests in supply chain optimization. Leverage remains healthy at 1.8x Net Debt/Adj. EBITDA.

Key Transformation Initiatives

1. Kenvue Acquisition — The pending acquisition of Kenvue (announced in 2025) will create a $32 billion pure-play global health & wellness leader with 10 iconic billion-dollar brands. Management outlined total anticipated EBITDA synergies of ~$2.1 billion, comprising ~$1.9B in cost synergies and ~$500M in incremental profit from revenue synergies, partially offset by ~$300M reinvestment.

Synergy Timing:

• Cost synergies: 40% Year 1, 40% Year 2, 20% Year 3
• Revenue synergies: Evenly spread across first 4 years (conservative assumption)

EPS Impact: Management expects no more than mid-single-digit dilution to Adj. EPS in 2027 vs. standalone plan (reflecting debt issuance, deal amortization, synergy timing, and base business reinvestment), followed by significant accretion in 2028 resulting in a 2026-2028 Adj. EPS CAGR within the mid-to-high single-digit algorithm.

2. IFP Joint Venture — The International Family Care and Professional business is being contributed to a joint venture with Suzano, expected to close mid-2026. Proceeds will partially fund the Kenvue acquisition.

3. 2024 Transformation Initiative — This multi-year restructuring is creating a more agile operating structure, accelerating innovation, and improving profitability. Charges of $348M (operating) were recognized in FY 2025.

4. Supply Chain Optimization — Significant progress on "One Supply Chain" initiative: reduced 30 product platforms to 11 across 9 manufacturing facilities, achieving ~6% reduction in Adjusted Cost of Goods Sold over 2 consecutive years, representing ~50% progress toward the 5-year ambition. Announced a $2B investment in North America to build a future-ready optimized supply network, including an advanced manufacturing facility in Warren, Ohio and an automated distribution center at Beech Island, South Carolina. The company has deployed laser-guided vehicles (LGVs) across regional distribution centers, saving $48 million over the past 5 years.

5. Private Label Exit — The strategic exit from ~$650 million of US private label diaper business is complete, allowing the company to focus on branded, higher-margin products.

Innovation Pipeline Highlights

Management emphasized that 78% of volume+mix-led growth was attributed to innovations launched in the last three years. Key product launches driving results:

Marketing Campaign Results:

• Giannis/Huggies Partnership: 1.8 billion paid impressions, 2.4 billion earned media impressions, ~30% higher ROI than all prior-year ads
• Goodnites Mission Dry (Scott Kelly): 277% increase in Google product searches, 44% brand engagement uptick, 92% positive sentiment
• Poise Giggle Dribble Campaign: 36% increase in first-time buyers, 26% YoY sales increase at key online customers
• China Metro Vending: First brand to place sanitary pad vending machines in metro stations

The company has won 11 Cannes Lions awards in 2025 for creative marketing excellence.

What Did Analysts Ask About?

The Q&A session revealed key investor concerns around competitive dynamics and the consumer environment:

On Costco Competition (Nick Modi, RBC): P&G is entering the club channel for diapers after decades of Huggies exclusivity. Management confirmed this will result in a ~60bps headwind to full-year growth starting Q1 2026, which is incorporated into guidance.

"We're really focused on providing consumers with differentiated brand value propositions no matter what channel they're shopping in. We're widely available, so is our competition." — Russ Torres, COO

On Consumer Value (Bonnie Herzog, Goldman Sachs): Management emphasized meeting consumers "at every rung of the good, better, best ladder" with superior value propositions. The company is cascading top-tier innovation down into value tiers while maintaining pricing discipline.

"I'm more excited about our next three years' innovation than what we've done in our past three. We're really excited about what the company's been working on." — Mike Hsu, CEO

On Price/Mix Dynamics (Lauren Lieberman, Barclays): Three factors drove Q4 pricing weakness: (1) rephased promotional activity to support innovation trial, (2) club channel mix shift to larger pack sizes, and (3) strategic price-pack investments to sharpen value tier competitiveness. Full-year promotional activity remained below category and 2019 levels.

On Kenvue Deal Timing (Nick Modi, RBC): Shareholder vote scheduled for January 29th with >90% voting in favor through Monday. Regulatory filings on track with all international jurisdictions expected by early February. Closing expected in second half of 2026.

On Margin Path to 40% (Steve Powers, Deutsche Bank): Management affirmed strong visibility to achieving 40% gross margin before end of decade. Key drivers: (1) costs expected flat vs. $200M headwind in 2025, (2) productivity at ~6% of COGS, (3) lapping strategic price investments from late 2024. Targets exclude any Kenvue integration favorability.

On International Margins (Edward Lewis, Rothschild): International gross margins lag North America by ~7 percentage points. Management sees "very significant upside" through: (1) developing premium segments, (2) leveraging global scale for productivity, and (3) operating leverage as markets scale.

On Promotional Philosophy (Robert Moskow, TD Cowen):

"We're really not interested in renting share through promotion... In a category where consumption is relatively stable or almost fixed, promo doesn't make sense. Our focus is on innovating at all rungs of good, better, best." — Mike Hsu, CEO

Risks and Concerns

• Costco distribution loss — Partial loss of diapers and training pants distribution beginning Q1 2026; ~60bps headwind
• Execution risk on Kenvue — Large M&A integration carries significant operational and financial risk
• Tariff exposure — OBBBA provisions and trade policy uncertainty remain headwinds
• FX volatility — Argentina and Türkiye currency impacts noted as ongoing risks
• Category growth deceleration — Guidance assumes ~2% category growth; Q4 weighted category growth slowed to 0.6% due to Hurricane Helene lapping and pantry loading effects
• Tax reform impacts — OBBBA provisions resulted in $96M valuation allowance on US foreign tax credits

Forward Catalysts

Bottom Line

Kimberly-Clark delivered a solid Q4 that capped off a transformational 2025. The 6% EPS beat and constructive 2026 guidance — including double-digit EPS growth from continuing operations — demonstrate the company's ability to drive profitable growth while executing on major strategic initiatives. The Kenvue acquisition represents a bold bet on compounding momentum in personal care, though integration execution will be critical. At -23% over the past year, the stock has largely de-risked the transformation story; the after-hours pop suggests investors are starting to re-engage as visibility improves.

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For more on Kimberly-Clark, see the Q4 2025 earnings transcript when available.