"Building on the strong foundation we established in 2024, we made further progress across the three pillars of our Powering Care strategy in the first quarter of 2025." – Mike hsu, Chairman and CEO, Kimberly-Clark.
April 22, 2025 - Kimberly-Clark Corporation (NYSE: KMB) today reported first quarter 2025 results driven by resilient consumer demand, the introduction of pioneering innovative new products, and leveraging sustained productivity momentum.
"Building on the strong foundation we established in 2024, we made further progress across the three pillars of our Powering Care strategy in the first quarter of 2025," said Kimberly-Clark Chairman and CEO, Mike Hsu. "Despite the evolving external landscape, our first quarter was consistent with our full-year plan."
Hsu continued, "At the same time, the current environment will now mean greater costs across our global supply chain versus our expectations at the beginning of the year. However, we remain confident in our ability to offset these costs over time and unlock our long-term potential. Our strong productivity momentum is fueling investments to advance our competitive advantage and driving profitability. Our innovation across the good-better-best value spectrum is winning with consumers and enabling us to gain share. I am proud of the effort of our teams around the world. Their commitment has positioned Kimberly-Clark to usher in our next chapter of growth and continue to deliver Better Care for a Better World."
Net sales of $4.8 billion were down 6.0 percent, driven primarily by impacts of currency and divestitures and business exits, with an organic sales decline of 1.6 percent versus the prior year. Reported gross margin was 35.8 percent; adjusted gross margin was 36.9 percent, down 20 basis points versus the prior year.
Diluted earnings per share were $1.70; adjusted earnings per share were $1.93, down 4.0 percent versus prior year.
Net sales of $4.8 billion were 6.0 percent lower than the prior year, including negative impacts of approximately 2.4 percent from foreign currency translation and approximately 2.0 percent from a combination of the PPE divestiture and the exit of the company's private label diaper business in the US. Organic sales decreased 1.6 percent driven by a 1.5 percent decrease in price while volume and mix were in line with a year ago.
Gross margin was 35.8 percent in the quarter, inclusive of $53 million, or approximately 110 basis points, of charges related to the 2024 Transformation Initiative. Excluding these charges, adjusted gross margin was 36.9 percent, down 20 basis points versus the prior year.
First quarter operating profit was $769 million compared to $853 million in the prior year. Operating profit in each period was inclusive of 2024 Transformation Initiative charges totaling $75 million and $45 million, respectively. Excluding these items, adjusted operating profit was $844 million, down 6.0 percent versus the prior year and inclusive of an unfavorable impact from currency translation of 2.2 percent.
Net interest expense was $57 million and in line with the prior year.
The first quarter effective tax rate was 23.8 percent, in line with the prior year. On an adjusted basis, the effective rate was 21.4 percent compared to 23.6 percent in the prior year. The first quarter of 2025 benefited from the resolution of certain tax matters.
Net income of equity companies was $44 million compared to $61 million in the prior year driven primarily by unfavorable currency impacts.
Diluted EPS in the quarter were $1.70 on a reported basis, down from $1.91 in the prior year. Reported amounts are inclusive of charges related to the company's 2024 Transformation Initiative of $0.23 and $0.10, respectively. On an adjusted basis, EPS decreased 4.0 percent to $1.93 as the benefits from a lower adjusted effective tax rate were partially offset by lower adjusted operating profit and lower net income of equity companies.
North America net sales of $2.7 billion decreased 3.9 percent in the quarter, driven by a combination of the PPE divestiture and the exit of the company's private label diaper business in the US. Organic sales declined 0.6 percent primarily driven by unfavorable price impacts of 0.6 percent reflecting targeted investments in the price pack architecture of the Baby and Child Care portfolio and enhancing value propositions in Professional.
Operating profit of $676 million increased 1.3 percent driven by strong productivity savings and optimization in marketing, selling, research and general expenses, partially offset by the impacts of divestiture and business exits and planned investments in the price-value tiers of the portfolio.
IPC net sales of $1.4 billion decreased 8.9 percent while organic sales decreased 2.8 percent, primarily driven by price investments across markets as we continually improve our value propositions across the portfolio.
Operating profit of $194 million decreased 19.8 percent, including an unfavorable currency translation impact of 5.0%. Operating profit decline was driven by planned investments in price-value tiers resulting in negative pricing net of cost inflation partially offset by productivity savings.
IFP sales of $791 million decreased 7.7 percent primarily due to divestitures and business exits and unfavorable currency impacts. Organic sales decreased 2.3 percent driven by unfavorable price impacts of 2.6 percent reflecting price investments to remain competitive across International Family Care markets.
Operating profit of $106 million decreased 3.6 percent primarily driven by unfavorable currency translation impacts as favorable costs and strong productivity savings were offset by investments in price-value propositions.
Cash provided by operations was $327 million compared to $438 million driven mainly by the decline in operating profit. Capital spending was $204 million compared to $194 million last year, and the company returned $466 million to shareholders through dividends and repurchases of common stock. Total debt was $7.2 billion as of March 31, 2025, down from $7.4 billion as of December 31, 2024.
Consistent with the Company's long term growth algorithm, 2025 Organic Sales Growth is expected to outpace the weighted average growth in the categories and countries it competes, which are currently growing in the range of one and a half to two percent, compared to approximately two percent at the start of the year. Reported Net Sales are forecast to reflect a negative impact of approximately 200 basis points from currency translation, compared to approximately 300 basis points previously, as well as a negative 240 basis point impact from a combination of the PPE divestiture and the exit of the company's private label diaper business in the US.
To reflect a reassessment of its cost base, including potential impacts from changes in the global geopolitical landscape, the company now expects its 2025 Adjusted Operating Profit to be flat to positive on a constant-currency basis versus the prior year, compared to a previous expectation of high single-digit growth on a constant currency basis. This outlook continues to include 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. Operating Profit growth is also expected to be negatively impacted by approximately 200 basis points from currency translation, compared to a previous expectation for a negative 300 basis point impact.
For the same reasons, Adjusted Earnings Per share are now expected to be flat to positive 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 an impact from higher net interest expense, a higher effective adjusted tax rate and lower shares outstanding, among others. Earnings Per Share are also currently expected to be negatively impacted by approximately 300 basis points from currency translation, including the impact on income from equity interests, compared to a previous expectation for a negative 350 to 400 basis point impact.
Finally, related to the incremental profit pressures the Company expects to experience, Adjusted Free Cash Flow is now expected to be approximately $2 billion in 2025 compared to a previous expectation of more than $2 billion.
This outlook reflects assumptions subject to change given the macro environment.
Kimberly-Clark (NYSE: KMB) and its trusted brands are an indispensable part of life for people in more than 175 countries and territories. The company's portfolio of brands, including Huggies, Kleenex, Scott, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Plenitud, Sweety, Softex, Viva and WypAll, hold No. 1 or No. 2 share positions in approximately 70 countries.
SOURCE: Kimberly-Clark