Kimberly Clark (KMB) Q1 FY26 earnings call: guidance and Q&A

Given rising oil prices, how will Kimberly-Clark offset potential H2 earnings pressure? What is the rank order of actions (pricing, productivity, ad spend), and is it realistic to offset most of the impact? Also, how will North America pricing be managed given the promotional environment and cost increases?

Management confirmed potential H2 incremental input costs of $150M-$170M if oil stays at $100/barrel, but these are not yet in guidance, nor are mitigations. They highlighted their 'Pricing Net Of Costs' (PNOC) discipline, integrated margin management, and strong productivity pipeline (6% in Q1). They also noted that North America promotional intensity is below pre-COVID levels, with promotions strategically supporting innovation to drive trial, not just renting volume.

“If we look into the back half of the year, and we assume that oil prices remain at around $100 per barrel on average, we will be facing potentially gross incremental input costs of around $150 million to $170 million. We've not built this into the outlook because there's a lot of moving pieces as we speak, but we have also not built in any potential mitigations.”

asked by Dara Mohsenian · answered by Nelson Urdaneta

Can you elaborate on the updated 2.5% category growth outlook (up from 2%)? Which regions/categories are performing stronger, and is the 3.3% North America Q1 run rate sustainable?

The updated 2.5% global category growth reflects the resilience of categories and commercial programming. North America categories rebounded strongly in Q1, partly due to timing shifts and cycling prior-year disruptions. Management does not foresee large-scale shifts in consumer buying behavior and expects the trailing 12-month weighted average category growth to remain around 2.5%, with no reason for significant evolution.

“our outlook for the year on a rolling 12 months, it's like 2.5% across our categories globally is what we have, and that's kind of the way we're looking at it.”

asked by Peter Grom · answered by Michael Hsu

How will the new organizational structure help restore Kenvue's growth while preserving Kimberly-Clark's core competitiveness? What are the biggest changes, and what is the status of the merger approval?

Management expressed strong conviction in the combined company's growth potential, viewing Kenvue's recent challenges as executional, not structural. They highlighted Kenvue's positive steps, including adopting a market-centric operating model consistent with Kimberly-Clark's. A world-class leadership team, 50-50 from both companies, has been assembled, and over 40 integration teams are working on synergy planning across COGS, SG&A, and revenue. The merger approval status was not explicitly stated, but integration planning is ongoing.

“our view is that the recent challenges, although widely reported have been largely executional, and we don't see them as being structural.”

asked by Javier Escalante Manzo · answered by Michael Hsu

Can you clarify the North America shipment timing mentioned in prepared remarks, given strong scanner data? Also, how will the $50M Q2 operating profit headwind be mitigated, and why isn't a full-year mitigation plan for potential H2 cost increases being provided?

North America consumption was ahead of shipments by ~200 bps in Q1, mainly due to strong activation programming in January leading to some December shipments, not inventory correction. Q2 organic sales growth is expected to be slightly below Q1 due to strong prior-year comps and a $20M DC fire headwind. The $50M Q2 operating profit headwind is deemed manageable, with 80% cost basket coverage. A full-year mitigation plan for H2's potential $150M-$170M cost increase is not yet provided because the cost outlook is still volatile, and teams are actively working on specific actions across revenue growth management, productivity, and supplier negotiations.

“The reason why we didn't get into what would the specific mitigating actions be for the second half is that the teams are actually working through them today.”

asked by Lauren Lieberman · answered by Nelson Urdaneta

How confident should investors be in Kimberly-Clark's ability to offset the current cost headwinds, given that the potential $150M-$170M in H2 is higher than the 2025 tariff impact that led to a lowered profit guide?

Management stated that the current cost headwinds are a fraction of the $1.6B-$1.7B additional costs faced in 2022-2023. They believe the business is better positioned now due to stronger cost management capabilities, industry-leading productivity, and enhanced revenue growth management discipline. They also highlighted strong base business momentum, with market share gains in 95% of sales-weighted markets in North America and 84% internationally.

“I think since the 2022, 2023 period, I think we've developed much stronger cost management capability, which is why we're delivering industry-leading productivity.”

asked by Robert Moskow · answered by Michael Hsu

How has Kimberly-Clark's ability to confront commodity cycles changed since Investor Day, and how does PNOC (Pricing Net Of Costs) strategy impact volume improvement, especially if incremental pricing or RGM is needed due to sustained inflation?

Management stated that commodity management has entirely changed, with a conscious effort to reduce volatility through programmatic hedging and strategic supplier relationships, making them better equipped than 5-10 years ago. They believe their PNOC philosophy and integrated margin management, which includes revenue growth management, allows them to manage through cycles. They aim to continue delivering volume by focusing on innovation that drives trial, rather than just promotion, and believe they can maintain volume even with pricing actions.

“everything has changed about commodity management since we've been here. And I think I think in the past, I think we used to let things flow quite a bit.”

asked by Chris Carey · answered by Michael Hsu