KIMBERLY CLARK CORP Q1 FY2025 earnings call

Mike Hsu stated that in the first quarter, the company made solid progress across the three pillars of the Powering Care strategy, with top line somewhat softer than expected but consistent with the full-year plan. Volume plus mix was solid, margins were optimized, and the enterprise matrix organization was playing a key role in scaling initiatives. The company is on track to generate approximately $200 million of SG&A savings in the next few years. There are three keys to winning: delivering stronger differentiation at every rung of the good-better-best ladder, delivering industry-leading productivity, and enabling a faster, more agile organization. Nelson Urdaneta discussed bridging the first quarter results, factors affecting first quarter organic sales, and expectations for acceleration in volume and mix, with Q2 expected to be an easy comp due to retail destocks. Mike Hsu also mentioned a strong pipeline to improve consumer value propositions globally, with a slate of innovation launched and expected to drive volume and mix growth.

No specific product segment financial performance in absolute terms and revenue contribution % provided in the transcript.

The new EPS guidance has currency neutral EPS growth at the midpoint of 50 bps compared to prior ~6.5%. The major impact is from a $300 million gross impact due to tariffs, with net impact around $200 million. Q2 is expected to have the biggest headwind from tariffs. SG&A savings started coming through in Q1, and the company expects volume and mix to accelerate in the remaining quarters of the year.

Aggregate US tariffs on China (driving about two-thirds of the $300 million gross impact), US reciprocal tariffs on other countries (about 10% of the impact), and retaliatory tariffs from other countries (around 25% of the impact). The company is working to mitigate these costs through supply chain moves, but it takes time.

Q: Lauren Lieberman asked about the gap in North America performance vs scanner and why we should expect acceleration in organic sales growth.

A: Nelson Urdaneta said first quarter organic sales were slightly below expectations, lapping strong 2024 quarter, factors included category growth, fewer shipment days, lower North America private label shipments, and strategic pricing investments. Expect acceleration in Q2 due to new product activations and tailwind from retail destocks. Mike Hsu added about strong consumer value proposition pipeline and innovation.

Q: Nik Modi asked about managing value seeking pressures, mix, and margin cadence.

A: Mike Hsu said revision of outlook is primarily cost related, categories have resilient demand, focused on cascading innovation from premium to tiers, prioritizing winning consumers and share, and managing mix over time.

Q: Dara Mohsenian asked about $300 million tariffs, detail on impact and offset.

A: Nelson Urdaneta said aggregate US tariffs on China, US reciprocal tariffs, and retaliatory tariffs from other countries are the main impacts. The company is working to mitigate costs, learned from past cycles, and is better positioned with Powering Care transformation. Mike Hsu added treating tariffs as discrete externality, re-optimizing network, and maintaining innovation and investment.

Q: Anna Lizzul asked about cost environment impact on marketing and innovation strategy.

A: Nelson Urdaneta said costs excluding tariffs are in line, $300 million tariff impact is discrete, maintaining investments in innovation, marketing, and supply chain transformation. Mike Hsu said avoiding reducing quality or marketing, giving plan a chance to perform.

Q: Javier Escalante asked about using pricing to drive mix in emerging markets and North America.

A: Mike Hsu said focused on volume and mix growth while maintaining PNOC discipline, cascading innovation, promoting new products for trial. Nelson Urdaneta added adjusting to marketplace realities but not promoting as a strategy, using integrated margin management for flexibility.

Q: Bonnie Herzog asked about bridging gap in EPS guidance.

A: Nelson Urdaneta said main change is $300 million tariff impact, slight currency moves, $200 million net headwind, Q2 biggest tariff headwind, SG&A savings starting to come through. Mike Hsu added about mainstream value approach and agile play.

Q: Christopher Carey asked about savings program and pricing program.

A: Mike Hsu said tariff complexity makes it not simple to pass through, can mitigate cost by switching sourcing. Nelson Urdaneta said savings program is on track, excited about future opportunities, and Powering Care program is in its second year with good progress.