Kimberly-Clark Corporation Q3 FY2025 earnings call

• Continues to transform into an industry-leading personal care company with volume plus mix-led growth for seven consecutive quarters.
• Held global weighted market share despite competitive promotion activity.
• Delivered consistent operating margin expansion and industry-leading productivity.
• Rewired organization with Russ Torres promoted to President and Chief Operating Officer, accelerating momentum.
• Focus on meeting consumers across the good, better, best spectrum via innovation-led growth.

Kimberly-Clark experienced volume plus mix-led growth for the seventh consecutive quarter. Despite challenges in the broader CPG industry, they held global weighted market share. Operating margin expanded, and they leveraged scale for consistent profitability. Revenue contribution wasn't broken down by specific product segments in detail, but overall, the focus was on volume and mix growth across categories.

• Expect organic growth to be largely in line with categories for the full year.
• Q4 expected to show similar volume plus mix-led growth as prior quarters.
• Anticipate gross margin to expand and operating profit margin to be not too different from prior year's same quarter, with full-year operating profit margin expansion expected.
• Mentioned potential step-up in EPS from continuing operations if IFP JV closes mid-2026, with adjusted EPS attributable to total KC being more muted initially.

• Competitive dynamics in the U.S. diaper market, including retailer private label and Chinese imports impacting mix and promotion.
• Volatility in input costs, particularly fiber prices, though efforts are being made to mitigate via JV and integrated margin management.
• Uncertainties related to tariffs and their impact on costs.

Q: Congrats on strong results. Update on U.S. diapers competitive dynamics, resuming marketing plans in Q4, consumer and retailer reaction, and steering market away from price war?

A: Increased competitive activity earlier in the quarter was navigated. Promotional activity shifted to drive trial for innovation. Gained share in diapers, with focus on innovation across good, better, best spectrum. Confident in products and ability to drive positive mix.

Q: Talk about shape of P&L in '26 and '27, dilution from IFP JV?

A: Working through details, but expect EPS from continuing operations to step up if JV closes mid-2026, while adjusted EPS attributable to total KC is more muted initially. Focus on underlying growth consistent with long-term algorithm.

Q: North America performance gap in quarter, hurricane shipment dynamics, and outlook?

A: Data sources differ; skew to larger untracked customers. Q3 gap due to lapping hurricane impacts and timing of promotional expense. Year-to-date shipments largely in line, with strong growth in digital and club channels not well tracked.

Q: Promotional activity in North America, margin implications, commodity outlook and tariffs?

A: Promotional activity to drive trial on innovation. Gross margins expected to expand in Q4, operating profit margin not too different from prior year. Mitigating tariff actions, with $70M reduction in gross tariffs and $50M mitigation ongoing.

Q: Clarity on 2025 top line guide, P&G exclusions on tariffs?

A: Organic sales year-to-date 1.6%, expect full-year growth in line with categories. Some products have tariff exclusions, like Brazilian eucalyptus for daily essentials.

Q: Diaper category evolution, competition in mid-tier, value ranges, ultra-premium; cost efforts towards reducing fiber volatility?

A: Compete via innovation across all tiers, cascading best innovation into mid-tiers. Focus on premiumization success in U.S. and China, also providing value at mainstream and premium tiers. JV with Suzano stabilizes fiber cost, integrated margin management reducing input cost volatility.