Kimberly-Clark 2025 Q2 Earnings Misses Targets as Net Income Falls 7.4%

Kimberly-Clark Corporation announced its fiscal 2025 Q2 earnings on August 1, 2025, reporting a mixed performance marked by a decrease in net income and revenue. The company missed analyst expectations with an EPS of $1.53, below the anticipated $1.66. Despite challenges, Kimberly-Clark raised its full-year outlook, projecting low-to-mid single-digit growth in adjusted operating profit and adjusted EPS. The guidance reflects optimism in the company's strategy, aiming to capitalize on strong market positions and transformation initiatives.

Revenue

Kimberly-Clark's revenue for the second quarter of 2025 was $4.16 billion, reflecting a 1.6% decrease from the previous year. The Baby and Child Care sector generated $1.77 billion, contributing significantly to the total revenue. The Family Care unit reported $997 million, while Professional services accounted for $465 million. Adult Care added $492 million to the revenue, and the Feminine Care segment contributed $412 million. Other segments combined yielded $29 million, summing to the total revenue figure of $4.16 billion.

Earnings/Net Income

The company's earnings per share (EPS) saw a decline of 5.0% to $1.53 in Q2 2025 from $1.61 in the same quarter of the previous year. Net income dropped to $512 million, marking a 7.4% decrease compared to the $553 million reported in Q2 2024. Despite these declines, Kimberly-Clark has maintained profitability over the years, showcasing operational resilience, although the EPS performance was weaker than anticipated.

Post-Earnings Price Action Review

Following the earnings announcement, Kimberly-Clark's strategy of buying shares after revenue increases and holding for 30 days resulted in a negative return of 7.55%, underperforming the benchmark by 8.76%. This suggests that the market reacted negatively to the earnings report, with the strategy yielding a Sharpe ratio of -3.34, indicating considerable risk. The volatility stood at 17.27%, with the maximum drawdown reaching 0.00%. This performance underscores the challenges faced in aligning market expectations with strategic outcomes, reflecting significant risks amid fluctuating market conditions.

CEO Commentary

Michael Hsu, CEO of Kimberly-Clark, expressed confidence in the company’s strategic direction, noting strong performance driven by commercial execution and innovation. He highlighted significant gains in China and the U.S., emphasizing the importance of meeting consumer needs across various value propositions. Hsu reiterated the company’s focus on enhancing agility and productivity, expressing optimism about future growth opportunities and Kimberly-Clark's ability to deliver consistent top-tier growth.

Guidance

For the second half of 2025, Kimberly-Clark anticipates continued strong performance, targeting low to mid-single-digit adjusted operating profit growth on a constant currency basis. The company expects organic sales growth driven by volume and mix, with a weighted average category growth projected at around 2%. Advertising and brand support are expected to increase to approximately 7% in the latter half of the year, while the gross tariff impact is forecasted to be $170 million, significantly lower than previous estimates.

Additional News

Kimberly-Clark recently announced a significant joint venture with Suzano, aiming to establish a global tissue company operating in over 70 countries. This strategic move is part of Kimberly-Clark's transformation strategy to pivot towards high-margin personal care segments. Additionally, Patricia Corsi, the company's Chief Marketing Officer, has been recognized by Forbes as one of the World's Most Influential CMOs for the second consecutive year, highlighting Kimberly-Clark's leadership in marketing excellence. Furthermore, the company declared its quarterly dividend, reinforcing its commitment to delivering shareholder value amidst ongoing strategic shifts.