Kimberly-Clark Corporation

Kimberly-Clark said Q2 organic sales were about 100 basis points below expectations. In North America consumer, shipments were down 1.4% versus consumption growth of 0.3%, with shipments lagging consumption by roughly 170 basis points. The company received a $45 million tariff refund in North America, which helped drive better-than-expected operating profit and EPS; productivity was 6.4%. Management also said Q2 inflationary headwinds were about $50 million, and for the second half they now expect about $150 million of gross input cost headwinds. China was described as a 50 basis point headwind in Q2, with a roughly 100 basis point headwind assumed for the full year and about $0.16 of EPS impact in the back half. On the outlook, management said the second-half China headwind is expected to be about 200 basis points split evenly across Q3 and Q4, and the $150 million of second-half input cost pressure should be fully offset through mitigation actions and the tariff refund so pricing net of cost inflation remains roughly neutral for the full year.

Mike Hsu emphasized that the quarter showed the durability of the Powering Care growth engine despite a noisy operating backdrop. He highlighted the 10th consecutive quarter of volume-plus-mix growth, strong global brand fundamentals, and continued investment in innovation and execution. He also framed the new alternative natural fiber program as potentially transformative, saying it could improve consumer performance, reduce reliance on natural forest fiber, and enhance margins over time.

Nelson Urdaneta focused on the mix of temporary headwinds and financial offsets. He quantified the $45 million tariff refund, said the company does not expect anything else materially large on that front, and updated second-half gross input cost pressure to about $150 million, now fully embedded in the outlook. He also explained that China’s second-half impact is expected to total about 200 basis points of headwind with roughly $0.16 of EPS impact, and reiterated that pricing net of cost inflation should be roughly neutral for the full year through mitigation and productivity.

Analysts pressed management on China, North America softness, pricing, promotion, and the Kenvue transaction. Management said there is no scientific evidence supporting the claims affecting the China diaper business, sellout has not worsened sequentially, and the recovery will take time; for North America, they pointed to the L.A. warehouse fire, retailer inventory shifts, and a softer category backdrop rather than a structural problem. On Kenvue, management said synergy planning is ahead of expectations operationally but stopped short of increasing the $1.9 billion synergy target, saying it is still early and more clarity will come closer to closing.