Kimberly-Clark Corporation (KMB) Earnings & Analysis

Latest quarter

Kimberly-Clark reported Q2 FY2026 revenue of $4.2 billion, up 0.62% from Q2 FY2025, while the company’s revenue as the consensus counts it missed the consensus by −1.02%. The company reported adjusted EPS, as the consensus counts it, of $1.80, versus the $2.00 consensus, a −10.0% difference.

Kimberly-Clark’s filing said reported sales growth was primarily driven by favorable currency, while organic sales were relatively flat and the China social-media disruption reduced organic growth by about 50 basis points. The filing reported gross margin of 38.3%, up 3.3 percentage points from a year earlier, and said one-time tariff refunds and productivity savings contributed to the increase. Kimberly-Clark reported operating margin of 15.1%, up 0.9 percentage points year over year. The company reported diluted EPS of $1.04, down −32.0%, and free cash flow of $557.0 million, down −4.79% from Q2 FY2025.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Mike Hsu said consumers remained pressured and category growth was moderating, while the company had recorded its 10th consecutive quarter of volume-plus-mix performance and held global weighted share. Hsu said discrete, one-off items in the quarter prompted the company to adjust its full-year outlook.

Chief Financial Officer Nelson said Q2 organic growth came in below the company’s expectations, with the China diaper disruption, North American trade-inventory reductions and slower category growth contributing. Nelson said a tariff refund and 6.4% productivity offset higher brand investment and supported adjusted operating-profit and EPS performance. Nelson said the company received a $45 million tariff refund in the U.S. and had not included anything much more material in its outlook for the rest of the year.

Answering questions about China, Russ said certified third-party laboratory tests had confirmed that the company’s products were safe and that the company was cooperating with Chinese authorities. Russ said China sellout had neither deteriorated sequentially nor turned positive, and the company had used conservative assumptions for the balance of the year. Nelson said the pace of China’s recovery, commodities, the Middle East crisis, inflation and consumer pressure remained uncertainties, and he said the company would not provide a specific 2027 view until it had more clarity on the pending transaction and other developments.

On North America, Nelson said the Los Angeles distribution-center fire and retailer inventory movements explained much of the difference between shipments and consumption. Russ said the company expected innovations, brand investment, activation plans and revenue-growth-management actions to support second-half growth in line with its categories.

Hsu said competitive promotional activity had increased slightly, while Russ said Kimberly-Clark did not intend to use excessive promotion to drive category growth. Russ said the company expected its promotional activity to normalize during the balance of the year and would take low-single-digit pricing actions across the portfolio in the second half to address inflation. Nelson said capital requirements for continuing initiatives had been incorporated into the company’s reported results, outlook and strategic plans.

Guidance

After adjusting its full-year outlook, Kimberly-Clark expects FY2026 adjusted EPS attributable to Kimberly-Clark to decline by a low-single-digit amount on a constant-currency basis. The company expects adjusted EPS from continuing operations to grow high single digits and adjusted operating profit to grow mid-single digits, both on a constant-currency basis. Kimberly-Clark expects FY2026 organic sales growth of 1.00%. Nelson said the company expects about $150.0 million of gross input-cost headwinds in the second half and expects China to reduce second-half organic-sales growth by about 200 basis points.