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    KMB
    Earnings call· Sep 2025(Q3 FY25)

    KIMBERLY CLARK CORP KMB

    Oct 30, 2025 Source

    Executive summary

    Kimberly-Clark Q3 FY25 — Volume & Mix-Led Growth Continues Amidst Competitive Environment

    Kimberly-Clark continued its volume and mix-led growth strategy, marking its seventh consecutive quarter, driven by innovation across all price tiers. Despite increased competitive activity and consumer pressure, the company held global market share and expanded operating margins. Management is focused on executing its long-term strategy, including managing the impact of the upcoming IFP joint venture and leveraging technology to drive premiumization and value.

    Highlights

    5

    • Achieved its seventh consecutive quarter of volume plus mix-led growth, a challenging feat in the broader CPG industry.

    • Held global weighted market share despite an uptick in competitive promotional activity during the quarter.

    • Delivered consistent operating margin expansion and industry-leading productivity in Q3, supporting reinvestment.

    • Gained 10 basis points of share in U.S. diapers in Q3 and 90 basis points year-to-date.

    • Digital channels in North America contributed 100% of growth this year, with a 7-point higher share than brick-and-mortar.

    Concerns

    3

    • Experienced increased competitive promotion activity, particularly in the U.S. diaper market, earlier in the quarter.

    • Noted that consumers are under pressure with challenged purchasing power, with no near-term catalyst for change.

    • Anticipates somewhat muted growth in adjusted EPS attributable to total KC in FY26 and FY27 due to the dilution from the IFP transaction.

    Guidance & targets

    12
    CategoryTargetConfidence
    Volume plus mix-led growth
    similar growth
    medium materiality
    High
    Diaper promotional activity
    normalize
    low materiality
    High
    Long-term organic growth
    ahead of our categories
    high materiality
    High
    Long-term constant currency operating profit growth
    in line with what we committed to
    high materiality
    High
    Gross margin target
    at least 40%
    high materiality
    High
    Operating profit target
    at least 18% to 20%
    high materiality
    High
    Gross margin
    get back to expanding
    medium materiality
    High
    Full year operating profit margin
    full year expansion
    high materiality
    High
    Full year organic sales growth
    largely in line with the categories
    high materiality
    High
    Q4 organic sales growth
    acceleration, if not at least at the same level of what we saw growth in Q3
    medium materiality
    High
    Tariff mitigating actions
    largely mitigate them all
    medium materiality
    High
    IFP transaction closing
    close sometime middle of next year
    high materiality
    High

    Operational metrics

    7
    Volume plus mix-led growth streak
    seventh consecutive quarter
    Q3 FY25

    Refers to Kimberly-Clark's overall growth performance.

    North America volume/mix growth
    2.2%
    YTD FY25

    Year-to-date volume/mix growth in North America, with a two-year stack comparison.

    North America digital channel growth contribution
    100%vs 99% last year
    FY25

    Percentage of North America's total growth coming from digital channels.

    North America digital channel share benefit
    7 pointshigher vs brick-and-mortar
    current

    Kimberly-Clark's share is 7 points higher in digital channels compared to brick-and-mortar.

    Gross tariffs
    $100 milliondown $70 million
    current

    Current gross tariff impact, reduced from $170 million.

    Tariff mitigating actions
    $50 millionstill mitigating
    current

    Amount of tariffs still being mitigated through various actions.

    Operating profit margin
    not too differentvs last year's Q4 (sequential)
    Q4 FY25

    Expected to be not too different from last year's Q4 due to increased marketing investments, despite gross margin expansion.

    Industry KPIs

    7
    MetricValueDetails
    Organic sales growthvolume plus mix-led growth
    Regional emerging market growthover 40%%
    Advertising marketing investmentstepping up investments
    Commodity input cost sensitivityvolatility
    Innovation new product contributionmultiple innovations
    Category growth benchmark market shareheld
    Core underlying EPS and operating marginconsistent expansion

    Product announcements

    3
    ProductTypeDetails
    Blowout Blockerlaunch
    HuggFit 360launch
    Snug & Dry (improved)update

    Deals & partnerships

    1
    SuzanoPartnership for the international family and professional (IFP) business. Aims to stabilize fiber sourcing and reduce KMB's stake in the business.

    This partnership with one of the most efficient fiber producers is intended to reduce fiber price volatility and is a key part of Kimberly-Clark's strategy to manage input costs.

    Risks & headwinds

    5
    Increased competitive promotion in U.S. diapersQ3 FY25

    uptick in competitive promotion activity; deeper discounting than originally thought

    Mitigation: Strategic shift of promotional activity to Q4 to drive trial for new innovations; focus on innovation-led strategy across good, better, best tiers.

    Consumer pressure and reduced purchasing powernear term

    consumers are really under pressure and their purchasing power is under pressure

    Mitigation: Strengthening value propositions and differentiated innovation at every rung of the good, better, best ladder; cascading innovations to mid-tiers.

    Tariff exposurethrough end of FY25 / early FY26

    $100 million gross tariffs (down from $170 million); $50 million still mitigating

    Mitigation: Mitigating actions are coming through; benefit from exclusions (e.g., Brazilian eucalyptus); teams activating toolkit to offset.

    Fiber price volatilityhistorically

    one of the key sources of that volatility was fiber prices

    Mitigation: IFP JV with Suzano to stabilize fiber source; integrated margin management mindset to smooth out input costs.

    Dilution to adjusted EPS attributable to total KC from IFP JVFY26, FY27

    somewhat more muted growth in adjusted EPS attributable to total KC; about half of the discontinued ops income go away in FY26, all in FY27

    Mitigation: Focus on driving underlying growth consistent with long-term algorithm; benefit from use of proceeds for share buybacks.

    What to watch in Q4 FY25

    5

    Diaper Promotional Activity Normalization

    Q4 and towards the end of the year
    Currentuptick in activity
    Targetnormalize

    Why it matters

    Indicates competitive intensity in the U.S. diaper market and the effectiveness of Kimberly-Clark's innovation-led strategy to drive trial without sustained deep discounting.

    we'd expect that as we get through the trial period, that promo activity to normalize as we get through the fourth quarter and towards the end of the year.

    Q&A highlights

    6

    Asked for an update on competitive dynamics in U.S. diapers, specifically regarding increased competition from private label and Chinese imports, and whether marketing plans resumed in Q4. Also inquired about strategies to avoid a price war given flat market volumes.

    Management noted increased competitive activity earlier in the quarter but stated their teams navigated it well. They emphasized an innovation-led strategy across all price tiers. Promotional activity was strategically shifted to Q4 to drive trial for new innovations, and the company gained share in U.S. diapers. They expressed confidence in their product quality and cost competitiveness against low-cost imports.

    “our strategy is totally innovation-led. And so we're really focused on making our products better at every tier of the good, better, best spectrum. And I think that strategy, as you can see in our results, is paying off pretty well.”

    asked by Javier Escalante Manzo · answered by Michael Hsu

    2 min read5 chapters

    Detailed Narrative

    01

    Innovation and Premiumization Strategy

    Kimberly-Clark's core strategy is innovation-led, focusing on improving products across the 'good, better, best' spectrum. This approach has driven seven consecutive quarters of volume plus mix-led growth. The company is cascading innovations like the HuggFit 360 and improved Snug & Dry into mid-tiers to offer superior value, while also driving premiumization, as seen in North America (40% to nearly 70% premium mix in 10 years) and China (6% to over 40% in 5 years).

    02

    Competitive Dynamics in U.S. Diapers

    The U.S. diaper market saw increased competitive activity and deeper discounting earlier in the quarter, including from private label and Chinese imports. Kimberly-Clark navigated this by strategically shifting some promotional activity to Q4, primarily to drive trial for new innovations. The company gained 10 basis points of share in Q3 and 90 basis points year-to-date in U.S. diapers, with promotional activity remaining lower than the category average.

    03

    North America Performance and Channel Shifts

    North America performance was stronger than external track trends due to factors like lapping last year's hurricane impacts and the timing of📎 promotional expenses. A significant migration of consumers to e-commerce and club channels, which are not always well-tracked by external data, also contributed. Digital channels accounted for 100% of North America's growth this year, with Kimberly-Clark holding a 7-point higher share in digital versus brick-and-mortar.

    04

    P&L Outlook Post-IFP JV

    The company is building plans for 2026 and 2027, targeting organic growth ahead of categories and long-term constant currency operating profit growth. They aim for gross margin of at least 40% and operating profit of at least 18-20% by the end of the decade. The IFP transaction, expected to close mid-2026, will lead to a step-up in EPS from continuing operations (due to increased income from equity companies and share buybacks) but a more muted growth in adjusted EPS attributable to total KC due to the partial loss of discontinued operations income.

    05

    Commodity and Tariff Management

    Kimberly-Clark is actively managing commodity volatility, particularly fiber prices, through its partnership with Suzano in the IFP JV, which stabilizes fiber sourcing. Gross tariff impact🌐 has reduced by $70 million to $100 million, with mitigating actions expected to largely offset the remaining impact by next year. The company also benefits from exclusions, such as for Brazilian eucalyptus, which is crucial for its products.

    AI-generated summary of the company’s earnings call. Not investment advice.