Kimberly-Clark Q1 Earnings Call Highlights

Kimberly-Clark NASDAQ: KMB executives said the company opened fiscal 2026 with “strong” top- and bottom-line performance, pointing to continued volume-plus-mix gains, productivity progress, and market share momentum, while also outlining near-term headwinds from a distribution-center fire and higher energy-related costs.

Speaking during the company’s first-quarter 2026 business update, Chairman and CEO Mike Hsu said the organization continues to “perform while transforming” under its “Powering Care” strategy, even as it navigates “new geopolitical and macroeconomic challenges” and a fire that “engulfed a West Coast distribution center in Ontario, California, operated by a third-party logistics partner.”

First-quarter growth driven by volume, mix, and innovation

Kimberly-Clark reported 2.5% organic growth in the first quarter, “led by 3% volume plus mix growth,” according to CFO Nelson Urdaneta. Hsu said the 3% volume-plus-mix result represented a continuation of momentum, noting the company has delivered “two consecutive years of broad-based volume plus mix growth.”

Management repeatedly tied growth to new products and commercial execution. Hsu said that over the past two years, “about 60% of our total net sales and more than 75% of our organic growth have been driven by innovation.” He added that 2026 would be “among our most active programming years in recent history,” with the company’s second-quarter launch slate expected to “double the net sales contribution” versus the average quarterly contribution since 2022.

Productivity and cost discipline remain central themes

Executives highlighted productivity as a key funding source for brand investment and competitiveness. Hsu said the company delivered “gross productivity of 6% of adjusted cost of goods sold” in the quarter and remains “on track for a third consecutive year” at roughly that level. He attributed these gains to supply chain strategies including “value stream simplification, network optimization, and scalable automation,” citing automation efforts at a baby and childcare plant in Nanjing, China.

Urdaneta said adjusted operating profit dollars rose about 4% year over year, reflecting “ongoing gains from supply chain productivity” and “SG&A-related efficiencies,” partially offset by “unfavorable pricing net of input costs” tied to planned investments to enhance value propositions. He also said adjusted SG&A as a percentage of net sales improved by 90 basis points year over year, which “enabled a 60 basis point increase in brand investments” in the quarter.

Segment update: North America share gains, but profit pressure

Chief Operating Officer Russ Torres said North America organic growth included volume-plus-mix up 1.7% for the quarter and described resilient category demand alongside innovation and activation momentum. He said personal care categories posted share gains, including “20 basis points of weighted value share and 60 basis points of volume share.”

Torres cited pockets of strength across the portfolio:

• Baby and childcare: 5% volume growth, which Torres said drove gains.
• Adult care: “High single-digit consumption growth,” supported by marketing and retail execution.
• Kleenex: A “180 basis point share gain” in the first quarter, supported by retailer execution, targeted marketing, and innovation.
• Professional: “Sixth consecutive quarter of volume-based growth,” with 2.4% organic growth.

However, Torres said North America operating profit declined year over year, as expected, due to a “490 basis point headwind from the private label diapers business exit,” tougher prior-year comparisons, and increased brand investment.

Torres also described internal metrics showing improvement in share momentum across 18 key North America “country category” cells. He said that by the end of 2025, 67% of net sales in those cells were gaining or holding share, rising to 95% in first-quarter 2026 on a rolling 12-month basis, compared with 32% in 2023.

International personal care posts stronger growth and margin gains

Torres reported that international personal care delivered volume-plus-mix-led growth of 5.5% and organic growth of 4%, driven by double-digit growth in Indonesia and Brazil, alongside gains in China and South Korea. He said share improved in several diaper markets, including China (up 180 basis points), Indonesia (up 320 basis points), and Brazil (up 40 basis points).

Pricing was lower in the quarter, Torres said, reflecting “the ongoing deflationary backdrop in China,” strategic trial-driving investments linked to innovation, and steps to maintain competitive value propositions in selected markets. Despite that, he said operating profit increased 21.9%, supported by “strong productivity gains and overhead savings.” Torres added that operating margin expanded to 16.2%, up roughly 500 basis points versus 2023.

Fire-related impacts, oil sensitivity, and 2026 outlook reiterated

Management discussed near-term disruptions tied to the Ontario, California distribution center fire. Torres said the incident is expected to reduce second-quarter organic growth by roughly “70-80 basis points,” while “higher energy-related costs” are expected to pressure operating profit margins by 70 basis points. Urdaneta put the second-quarter financial impact from the fire at about $50 million and added that the company also expects “some incremental costs due to the conflict in the Middle East.” Both executives said the company expects to mitigate these costs in the second half.

Urdaneta also addressed commodity sensitivity, noting that oil and oil-linked derivatives represent about a quarter of cost of goods sold. He said the company is “roughly 80% covered across our cost basket for the year,” and cautioned that if oil prices persist at $100 per barrel through the second half, incremental gross input cost inflation could be $150 million to $170 million—an amount “not built into the outlook” provided.

For full-year 2026, Urdaneta said the company is maintaining the outlook shared in January. Key elements included:

• Organic growth: Expected to be “in line to ahead of category growth” for North America and international personal care.
• Adjusted operating profit: Projected to be “on-algorithm” with mid- to high-single-digit growth on a constant currency basis, assuming a mid-year close of the International Family Care and Professional (IFP) transaction.
• Adjusted EPS from continuing operations: Expected to grow double digits on a constant currency basis, driven in part by an “approximately 40% increase in income from equity companies” for the full year after the IFP close.
• Adjusted effective tax rate: Approximately 23%.
• Adjusted free cash flow: Approximately $2 billion, with capital investment expected to rise to about $1.3 billion from $1.1 billion last year.

On first-quarter earnings, Urdaneta said adjusted EPS from continuing operations decreased 1.2%, while adjusted EPS attributable to Kimberly-Clark increased 2.1%. He attributed the tax-related pressure to a “550 basis point increase in the adjusted tax rate” from continuing operations, driven primarily by the absence of discrete tax benefits recorded in the first quarter of 2025 and a change in U.S. tax laws effective July 2025. The company also reported adjusted free cash flow of $405 million for the quarter.

Looking ahead, Urdaneta said net sales are expected to be balanced roughly 50/50 between the first and second halves, while adjusted operating profit is expected to be roughly 49/51. He added that adjusted EPS attributable to total Kimberly-Clark is expected to be weighted 52% to the first half and 48% to the second half, while EPS from continuing operations is expected to be split 47%/53%, reflecting, among other factors, dilution from the IFP transaction in the second half.

Finally, executives emphasized progress on transaction planning, including the pending Kenvue acquisition and the IFP joint venture with Suzano. Hsu said integration planning for Kenvue is “progressing well,” and reiterated confidence in synergy targets, including “$2.1 billion in total net synergies.” Torres said more than 40 integration teams are working on planning and described synergy opportunities across cost of goods sold, overheads, and growth spending, as well as potential revenue synergies tied to distribution expansion and capabilities such as e-commerce and revenue growth management.

Hsu closed by saying the company is “building for the future,” and expects Powering Care to “fuel our momentum and enable us to remain resilient” through an evolving external environment.

About Kimberly-Clark NASDAQ: KMB

Kimberly-Clark Corporation is a U.S.-based multinational manufacturer of personal care and consumer tissue products. The company develops, produces and markets a range of consumer brands and professional products, including facial and bathroom tissues, disposable diapers and training pants, feminine care, incontinence products and workplace hygiene solutions. Known for consumer-facing names such as Kleenex, Huggies, Kotex, Cottonelle and Scott, as well as professional offerings under Kimberly-Clark Professional and KleenGuard, the company supplies goods to retail, healthcare and institutional customers.

Founded in 1872 in Neenah, Wisconsin, Kimberly-Clark has expanded from its 19th-century paper-making roots into a global household and workplace products company.

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