• Organic Sales Growth (Full Year 2024): 1.5%
• Adjusted Gross Margin (Full Year 2024): 60.4%, an increase of 200 basis points year over year
• Adjusted Diluted EPS (Full Year 2024): $1.14
• Organic Sales Growth (Q4 2024): 1.7%
• Adjusted Diluted EPS (Q4 2024): $0.26
• Self Care Organic Sales Growth (Q4 2024): 2.9%
• Essential Health Organic Sales Decline (Q4 2024): 0.7%
• Skin Health and Beauty Organic Sales Growth (Q4 2024): 2.6%
• Adjusted Operating Margin (Full Year 2024): 21.5%
• Net Interest Expense (Full Year 2024): $378 million
• Adjusted Effective Tax Rate (Full Year 2024): 25.5%
• Expected Organic Sales Growth (2025): 2% to 4%
• Expected Adjusted Operating Margin Expansion (2025): Planned expansion year over year

• Warning! GuruFocus has detected 9 Warning Signs with EMBC.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kenvue Inc (NYSE:KVUE) expanded its adjusted gross margin by 200 basis points year over year to 60.4%, driven by strong productivity enhancements.
• The company successfully executed the first year of its 'Vue Forward' initiative, aiming for $350 million in annualized savings by 2026.
• Kenvue Inc (NYSE:KVUE) increased its total brand investment by about 20%, focusing on advertising, social media influencer-led campaigns, and healthcare professional engagement.
• The Skin Health and Beauty segment showed volume-led organic sales growth, particularly strong in EMEA and Latin America.
• Kenvue Inc (NYSE:KVUE) is launching 40% more innovation in 2025 compared to 2024, aiming to strengthen its portfolio through premiumization and extension into adjacencies.

Negative Points

• Organic sales growth for 2024 was 1.5%, below expectations, partly due to lower incidences of cough, cold, and flu, impacting the pediatric pain franchise.
• The company faced a reduction in distributor orders in Asia Pacific, particularly in China, due to temporary distribution network disruptions.
• Fourth-quarter organic sales growth was only 1.7%, falling short of expectations due to weak December sales.
• Kenvue Inc (NYSE:KVUE) anticipates a challenging external environment in 2025, with economic uncertainty, geopolitical tensions, and a stronger dollar.
• The company expects a three- to four-point headwind in the first quarter of 2025 due to destocking and strategic price investments.

Q & A Highlights

Q: Can you clarify the impact of the negative factors from Q4 on Q1 2025, particularly regarding cold and flu and Essential Health? Are you expecting restocking of pediatric cold and flu medicine? A: We are not expecting an uptick in Q1 for pediatric cold and flu due to erratic patterns in the US and inventory destocking in China. The lingering impact of distribution disruptions in China will also take time to resolve. These factors will create a 3 to 4 point drag on Q1 results. (Thibaut Mongon, CEO; Paul Ruh, CFO)

Q: What are your category growth assumptions for 2025, and how do you see this playing out in the US versus internationally? A: We expect category growth to slow from 3%-4% to 2%-3% in 2025, primarily due to a lower impact of pricing. Consumers remain focused on health and are not compromising on quality, as seen by flat or declining private label penetration. (Thibaut Mongon, CEO)

Q: Can you provide more insight into the innovation pipeline for Skin Health and Beauty and potential shelf space gains in 2025? A: We are rolling out a stronger innovation pipeline in 2025, supported by influencer-led campaigns and increased healthcare professional engagement. We expect to regain leadership in key markets and expand distribution, particularly in Sun Care. (Thibaut Mongon, CEO)

Q: Can you elaborate on the temporary trade investments in your guidance and the expected impact on pricing and margins? A: We are making strategic pricing adjustments in the US to enhance competitiveness, focusing on select brands and codes. This will result in negative value realization in the US in the first half of 2025, but we expect positive value realization globally in the second half. (Thibaut Mongon, CEO; Paul Ruh, CFO)

Q: How do you plan to address the distribution challenges in China, and what changes are you implementing? A: We are replacing underperforming distributors and reclaiming responsibility for brand activation with key local retailers. This will improve brand activation and execution visibility in lower-tier markets. (Thibaut Mongon, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.