Release Date: April 22, 2025

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

Positive Points

• Kimberly-Clark Corp (KMB, Financial) is making solid progress across its Powering Care strategy, focusing on innovation and consumer value propositions.
• The company is on track to generate approximately $200 million in SG&A savings over the next few years.
• Kimberly-Clark Corp (KMB) is maintaining its investment in innovation and marketing despite cost pressures, ensuring long-term growth.
• The company has a strong pipeline of new products and go-to-market activations, expected to drive volume and mix growth.
• Kimberly-Clark Corp (KMB) is leveraging its integrated margin management approach to optimize margins and deliver world-class productivity.

Negative Points

• The company faced a softer-than-expected top line in the first quarter, trailing behind scanner data results in North America.
• Kimberly-Clark Corp (KMB) is dealing with a significant $300 million impact from tariffs, affecting its cost structure.
• The company is experiencing lower year-on-year North America private label shipments, impacting organic sales.
• There is a need for strategic pricing investments in various markets due to a highly competitive environment.
• Kimberly-Clark Corp (KMB) is navigating a rapidly evolving external environment, which presents challenges in maintaining its growth trajectory.

Q & A Highlights

Q: Can you explain the gap in North America's performance compared to scanner data and the expected acceleration in organic sales growth? A: Nelson Urdaneta, CFO, explained that the first quarter's organic sales were slightly below expectations due to factors like fewer shipping days and lower private label shipments. However, they expect acceleration in volume and mix, driven by new product activations and a favorable comparison to last year's retail destocking. Michael Hsu, CEO, added that they have a strong pipeline of innovations to improve consumer value propositions globally, which should drive growth in the coming quarters.

Q: How are you managing value-seeking pressures while maintaining price mix and margin cadence? A: Michael Hsu, CEO, stated that the revision of the outlook is primarily due to cost-related headwinds. The company is focused on providing better care for consumers and expects to deliver healthy volume and mix-driven organic growth. They are innovating across different tiers to offer better products at lower costs, ensuring affordability remains a core strategy.

Q: Can you provide more detail on the $300 million in tariffs and how you plan to offset these costs? A: Nelson Urdaneta, CFO, explained that the majority of the tariff impact comes from US tariffs on China, with additional impacts from reciprocal and retaliatory tariffs. The company plans to mitigate these costs through supply chain adjustments and expects to address about one-third of the impact this year, with full mitigation by 2026.

Q: How is the cost environment affecting your ability to invest in marketing and innovation? A: Nelson Urdaneta, CFO, stated that despite the cost pressures, the company intends to maintain its investment levels in marketing and innovation. They are committed to their long-term strategy and continue to invest in their supply chain transformation as part of the Powering Care strategy.

Q: How are you using pricing to drive mix in North America and emerging markets? A: Michael Hsu, CEO, emphasized that the focus is on driving volume and mix growth while maintaining pricing discipline. The strategy involves improving product quality and cascading innovation throughout value tiers. In North America, promotion is used as a trial vehicle for innovation rather than a sustainable growth driver.

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