DALLAS (News release) -- Kimberly-Clark Corporation reported third quarter 2025 results driven by resilient consumer demand for the company's brands, the introduction of pioneering innovative new products, and leveraging sustained, industry-leading productivity.
"The operating environment remains dynamic, but we continue to execute our strategy with discipline and excellence as we play to win," said Kimberly-Clark Chairman and CEO, Mike Hsu. "We once again delivered broad-based volume-plus-mix-led growth, even while volume has been somewhat challenged in the broader industry. We held global weighted share, reflecting the strength of our brands across geographies and the good-better-best ladder. We continued to follow through on our decisive actions to transform Kimberly-Clark into an industry-leading personal care company poised for long-term durable growth."
Hsu continued: "I'm very proud of how our teams around the world are living our purpose while also positioning Kimberly-Clark to drive value for our shareholders, customers, consumers, and our communities."
Quarter Highlights
- Unless otherwise noted, reported results in this release are based on continuing operations and exclude the International Family Care and Professional ("IFP") business, which is reported as discontinued operations.
- Net sales of $4.2 billion were in line with prior year with organic sales growth of 2.5 percent offset by divestitures and business exits.
- Reported gross margin was 36.0 percent; adjusted gross margin was 36.8 percent, down 170 basis points versus the prior year.
- Diluted earnings per share ("EPS") attributable to Kimberly-Clark were $1.34; adjusted EPS attributable to Kimberly-Clark were $1.82, broadly in line with prior year.
Third Quarter 2025 Res ults
Net sales of $4.2 billion were in line with prior year including negative impacts of approximately 2.2 percent from the exit of the company's private label diaper business in the US. Organic sales increased 2.5 percent driven by 2.4 percent volume growth, while portfolio mix and price were broadly in line with a year ago.
Gross margin was 36.0 percent in the quarter, inclusive of $34 million, or approximately 80 basis points, of charges related to the 2024 Transformation Initiative. Excluding these charges, adjusted gross margin was 36.8 percent, down 170 basis points versus the prior year reflecting strong productivity gains that were more than offset by unfavorable pricing net of cost inflation, reflecting planned investments to improve price:value tiers across the portfolio, as well as incremental tariff-driven costs.
Third quarter operating profit was $621 million. This was inclusive of 2024 Transformation Initiative charges totaling $62 million. Excluding these charges, adjusted operating profit was $683 million, in line with the prior year as a combination of lower marketing, research and general expenses driven by efficiency gains as well as lower incentive accruals versus the prior year offset gross margin headwinds.
Net interest expense was $59 million versus $49 million in the prior year primarily driven by lower interest income.
The third quarter effective tax rate was 45.4 percent, compared to 19.4 percent in the prior year. On an adjusted basis, the effective rate was 26.5 percent compared to 21.5 percent in the prior year. The year-on-year impact was driven primarily by a combination of transitory impacts in the current year from the One Big Beautiful Bill Act ("OBBBA") and lapping of the resolution of certain tax matters in the prior year period.
Net income of equity companies was $46 million broadly in line with year ago.
Income from discontinued operations, net of income taxes was $110 million compared to $92 million in the prior year driven primarily by a reduction in depreciation and amortization expense of $30 million due to discontinued operations reporting requirements, partially offset by pre-tax separation costs of $17 million.
Diluted EPS attributable to Kimberly-Clark in the quarter were $1.34 on a reported basis, down from $2.69 in the prior year. These reported amounts are inclusive of $0.48 of charges and $0.86 of net benefit, respectively, for certain items that management doesn't believe reflect our underlying and ongoing operations. Excluding these items, adjusted EPS attributable to Kimberly-Clark were $1.82 and broadly in line with a year ago.
Year-To-Date Results
For the first nine months of the year, sales of $12.4 billion decreased 2.6 percent primarily due to a 3.0 percent negative impact from a combination of the PPE divestiture and the exit of the company's private label diaper business in the US, as well as a 1.2 percent negative impact from foreign currency translation. Organic sales grew 1.6 percent primarily from a 2.4 percent increase in volume, partially offset by price investments of 0.9 percent, while portfolio mix was broadly in line with a year ago.
For the first nine months of the year, gross margin was 36.0 percent, inclusive of $169 million, or approximately 140 basis points, of charges related to the 2024 Transformation Initiative. Excluding these charges, adjusted gross margin was 37.4 percent, down 130 basis points versus the prior year, as strong productivity gains were more than offset by unfavorable pricing net of cost inflation, reflecting planned investments to improve price:value tiers across the portfolio, as well as incremental tariff-related costs.
Year-to-date operating profit was $1.8 billion, including $258 million of costs related to the 2024 Transformation Initiative. Year-to-date adjusted operating profit was $2.1 billion in 2025 versus $2.2 billion in 2024, a decline of 3.2 percent. This decline reflected an unfavorable impact from currency translation of 80 basis points and the gross profit headwinds discussed above that were partially offset by lower marketing, research and general expenses driven by efficiency gains.
Net interest expense was $178 million versus $169 million in the prior year primarily driven by lower interest income.
The year-to-date effective tax rate was 30.6 percent, compared to 19.1 percent in the prior year. On an adjusted basis, the effective rate was 22.6 percent compared to 21.7 percent in the prior year, with the increase consistent with the third quarter discussion above.
Net income of equity companies was $137 million compared to $172 million in the prior year driven primarily by unfavorable currency impacts.
Income from discontinued operations, net of income taxes was $281 million compared to $283 million in the prior year as pre-tax separation costs of $50 million were largely offset by a reduction in depreciation and amortization expense of $40 million due to discontinued operations reporting requirements.
Through the first nine months of the year, diluted EPS attributable to Kimberly-Clark were $4.57 on a reported basis, compared to $6.21 last year. These reported amounts are inclusive of $1.10 of charges and $0.41 of net benefit, respectively, for certain items that management doesn't believe reflect our underlying and ongoing operations. Excluding these items, adjusted EPS attributable to Kimberly-Clark were $5.67 compared to $5.80 last year down 2.2 percent and inclusive of currency translation headwinds of 160 basis points.
North America ("NA")
North America net sales of $2.7 billion decreased 0.8 percent in the quarter, driven by the exit of the company's private label diaper business in the US, partially offset by organic sales growth. Organic sales increased 2.7 percent primarily driven by strong volume growth of 2.6 percent reflecting the strength of innovations and activations in the quarter. Year-to-date organic sales increased 2.1 percent with volume led growth at 2.6 percent partially offset by declines in price and mix. Personal Care categories value market share were up 30 basis points for the year-to-date period, with volume share up 80 basis points.
Operating profit of $640 million was in line with prior year despite a 220 basis point headwind from divestiture and business exits. Results reflect organic growth led gains, strong productivity savings and planned lower spend in marketing, research and general expenses offset by planned investments in the price:value tiers of the portfolio and recent tariffs. Year-to-date operating profit was down 1.0 percent due to a 340 basis point headwind from divestiture and business exits.
International Personal Care ("IPC")
IPC net sales of $1.4 billion increased 1.9 percent with organic sales growth of 2.1 percent, driven by strong volume led growth of 2.0 percent reflecting improvements in consumer value propositions across the portfolio, and enhanced portfolio mix of 1.6 percent, partially offset by price investments. Year-to-date organic sales were up 0.8 percent versus a year ago led by volume growth and improved portfolio mix growth of 2.0 percent and 1.0 percent, respectively, partially offset by price investments. Personal Care categories gained weighted share in the quarter with strong gains in Diapers and Pants.
Operating profit of $214 million increased 6.5 percent driven by volume and mix led gains, strong productivity savings and planned lower spend in marketing, research and general expenses partially offset by investments in price:value tiers resulting in negative pricing net of cost inflation. Year-to-date operating profit was down 9.7 percent primarily driven by strong comparisons in the first half of the year and investments to improve consumer value propositions.
Cash Flow and Balance Sheet
Year-to-date cash provided by operations (inclusive of discontinued operations) was $1.8 billion compared to $2.4 billion last year driven by the lower operating profit and timing impacts to working capital. Year-to-date capital spending was $741 million compared to $512 million last year. The company returned $1.4 billion to shareholders through dividends and repurchases of common stock. Total debt was $7.3 billion as of September 30, 2025, down from $7.4 billion as of December 31, 2024.
2025 Outlook
As a reminder, the company adjusted its full-year outlook in August to be consistent with the reporting of the IFP business as discontinued operations. Its outlook for Net Sales, Organic Sales Growth and Adjusted Operating Profit growth now reflect the results of the remaining two segments, North America and IPC, as well as its overhead structure excluding the IFP business. Its outlook for Adjusted Earnings per Share Attributable to Kimberly-Clark and Adjusted Free Cash Flow will continue to include the IFP business until the close of the joint venture transaction with Suzano, anticipated to occur mid-year 2026.
2025 Organic Sales Growth is expected to be broadly in line with the weighted average growth in the categories and countries it competes, which are currently growing at approximately two percent. Reported Net Sales are forecast to reflect a negative impact of approximately 100 basis points from currency translation, as well as a negative 290 basis point impact from a combination of the PPE divestiture and the exit of the company's private label diaper business in the US.
The company expects its 2025 Adjusted Operating Profit to grow at a low single digit rate on a constant-currency basis versus the prior year. This outlook includes a negative 380 basis point impact from a combination of its PPE divestiture and the exit of the company's private label diaper business in the US. Operating Profit growth is also expected to be negatively impacted by approximately 70 basis points from currency translation.
Adjusted Earnings per Share Attributable to Kimberly-Clark are expected to grow at a low-to-mid single digit rate on a constant-currency basis including a negative 320 basis point impact from a combination of its PPE divestiture and the exit of the company's private label diaper business in the US, as well as a negative 100 basis point impact from items below operating profit including higher net interest expense, a higher adjusted effective tax rate, partially offset by lower shares outstanding. This outlook also includes a favorable impact of approximately 200 basis points, or $0.16 per diluted share, from the cessation of depreciation and amortization expense for assets held for sale, reflected in earnings from discontinued operations. Earnings Per Share are expected to be negatively impacted by approximately 150 basis points from currency translation, including the impact on income from equity interests.
Adjusted Free Cash Flow is expected to be approximately $2 billion in 2025.
This outlook reflects assumptions subject to change given the macro environment.
