Kimberly-Clark Corporation (KMB Quick QuoteKMB - Free Report) posted second-quarter 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate, while both decreased from the year-ago period’s actuals. 

Kimberly-Clark’s results underscore the continued execution of its Powering Care strategy, with strong productivity gains and consumer-focused innovation enhancing its competitive position. The company delivered robust organic sales growth, driven by its highest volume increase in five years. Management also raised its guidance for 2025.

Kimberly-Clark Corporation Price, Consensus and EPS Surprise

Kimberly-Clark Corporation price-consensus-eps-surprise-chart | Kimberly-Clark Corporation Quote

Taking a Closer Look at KMB’s Q2 Results

The adjusted earnings were $1.92 per share, which beat the Zacks Consensus Estimate of $1.68. However, the bottom line declined 2% year over year, due to reduced adjusted operating profit and net income from equity companies. 

Kimberly-Clark’s sales were $4,163 million, marking a 1.6% decline from $4,231 million in the prior-year quarter. The figure beat the Zacks Consensus Estimate of $4,057 million. The year-over-year decline was primarily due to a 4.4% negative impact from the divestiture of the Personal Protective Equipment (“PPE”) business and the exit of the company’s U.S. private label diaper business, along with an additional 1% headwind from unfavorable foreign currency translation.

The company’s organic sales increased 3.9% driven by 5% volume growth, partially offset by a 1.2% impact from strategic pricing investments. Portfolio mix remained broadly consistent with the prior year. We forecasted 2.9% organic sales growth for the quarter.

The adjusted gross margin reached 36.9%, marking a 180-basis-point (bps) decrease. The decline reflected unfavorable pricing net of cost inflation, caused by planned investments to enhance price-value tiers across the portfolio and incremental tariff-related costs. These headwinds were partially mitigated by strong productivity gains. We predicted an adjusted gross margin of 34.8%.

Adjusted operating profit fell 2.2% to $713 million, due to lower gross profit, partially offset by planned reductions in marketing, research and general expenses.

KMB Provides Q2 Insights by Segment

The segments exclude the International Family Care and Professional ("IFP") business, which is reported as discontinued operations.

North America (“NA”) segment’s net sales reached $2,730 million, down 1.9% year over year, reflecting the divestiture of the PPE business and the exit from the U.S. private-label diaper business. These impacts were partially offset by organic sales growth. Our model expected NA net sales of $2,688 million for the quarter. Organic sales increased 4.3%, driven by a 5.2% increase in volume, supported by successful innovations and activations during the quarter. Personal Care categories gained 60 bps of weighted market share.

NA’s operating profit was $655 million, reflecting a 4% decrease. This was primarily due to 500 bps headwind from the divestiture and business exits. Excluding these impacts, results benefited from volume-led growth and strong productivity savings, partially offset by planned investments to strengthen price-value tiers across the portfolio and incremental tariff costs.

The International Personal Care (“IPC”) segment’s net sales were $1,433 million, up 0.4%, with organic sales growth of 3.3%. This reflected strong volume growth of 4.8%, along with a 1.2% improvement in portfolio mix, partially offset by unfavorable currency translation. Our model expected IPC net sales of $1,383.5 million for the quarter. 

IPC’s operating profit reached $182 million, marking a 12.9% decrease, due to investments in price-value tiers, which resulted in negative pricing net of cost inflation. These impacts were partially mitigated by volume-led gains and productivity savings.

Kimberly-Clark’s Financial Health Snapshot

This Zacks Rank #2 (Buy) company ended the quarter with cash and cash equivalents of $634 million, long-term debt of $6,470 million and total stockholders’ equity of $1,403 million.

For the six months ended June 30, cash provided by operations was $1,097 million. Management incurred capital spending of $401 million in the same time frame. The company returned $944 million to its shareholders via dividends and share buybacks.

What to Expect From KMB in 2025

The company revised its full-year outlook to reflect the reclassification of the IFP business as discontinued operations. Guidance for net sales, organic sales growth and adjusted operating profit now covers only the North America and International Personal Care segments, along with related overhead, excluding IFP. Adjusted earnings per share (EPS) and adjusted free cash flow will continue to include IFP until the planned mid-2026 close of the joint venture with Suzano.

In line with the long-term growth strategy, Kimberly-Clark expects 2025 organic sales growth to outpace the weighted-average growth of the markets and categories, which are currently expanding at roughly 2%.

For 2025, the company’s net sales are expected to reflect a negative impact of approximately 100 bps from currency translation. Additionally, a 290-basis-point headwind from the divestiture of the PPE business and the exit from the U.S. private-label diaper business.

Adjusted operating profit is predicted to grow at a low-to-mid single-digit rate on a constant-currency basis compared with the prior year. This outlook continues to include a 380-bps negative impact from the PPE divestiture and the exit from the private label diaper business. Operating profit growth will also face a negative impact of approximately 100 bps from unfavorable currency rates compared with the previous forecast of 200 bps.

Adjusted EPS are now expected to grow at a low-to-mid single-digit rate on a constant-currency basis. This reflects a 320-basis-point adverse impact from the PPE and private-label diaper divestitures, as well as a 100-basis-point headwind from factors below operating profit, including higher net interest expense, a higher effective tax rate and lower shares outstanding. The outlook also includes an estimated 200-basis-point favorable impact or 16 cents per diluted share from the cessation of depreciation and amortization expense on assets held for sale, reflected in earnings from discontinued operations.

In addition, EPS is also expected to be negatively impacted by around 150 bps from currency translation, including the impact on income from equity interests compared with a previously estimated 300 basis points.

KMB stock has lost 3.5% in the past three months compared with the industry’s 5.2% decline.

Image Source: Zacks Investment Research

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