DALLAS (News release) -- Kimberly-Clark Corporation reported second quarter 2025 results driven by resilient consumer demand, the introduction of pioneering innovative new products, and leveraging sustained productivity momentum.

"Our second quarter results are indicative of the exceptional progress we are making executing our Powering Care strategy" said Kimberly-Clark Chairman and CEO, Mike Hsu. "This was a very active quarter and one of the strongest in our recent history. We delivered strong organic sales growth, fueled by the highest volume growth we've achieved in five years. Our durable brands, differentiated value propositions and innovation investments enabled us to enhance and maintain leading market share positions across categories and price tiers. We took decisive actions to set Kimberly-Clark up for enhanced, sustainable growth and profitability.

Hsu continued: "Our strategy comes to life through our people--I'm proud of how our team continues to perform as we transform. Despite a dynamic operating environment, we are well-positioned to deliver a strong second year of our transformation."

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 down 1.6 percent, driven primarily by divestitures and business exits and unfavorable currency translation, with organic sales growth of 3.9 percent versus the prior year.
• Reported gross margin was 35.0 percent; adjusted gross margin was 36.9 percent, down 180 basis points versus the prior year.
• Diluted earnings per share ("EPS") attributable to Kimberly-Clark were $1.53; adjusted EPS attributable to Kimberly-Clark were $1.92, down 2.0 percent versus prior year.

Second Quarter 2025 Results

Net sales of $4.2 billion were 1.6 percent lower than the prior year due to negative impacts of approximately 4.4 percent from a combination of the Personal Protective Equipment ("PPE") divestiture and the exit of the company's private label diaper business in the US and approximately 1.0 percent from foreign currency translation. Organic sales increased 3.9 percent driven by 5.0 percent volume led growth partially offset by investments in price of 1.2 percent, while portfolio mix was broadly in line with a year ago.

Gross margin was 35.0 percent in the quarter, inclusive of $82 million, or approximately 190 basis points, of charges related to the 2024 Transformation Initiative. Excluding these charges, adjusted gross margin was 36.9 percent, down 180 basis points versus the prior year driven 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, that were partially offset by strong productivity gains.

Second quarter operating profit was $592 million compared to $539 million in the prior year. Operating profit in each period was inclusive of 2024 Transformation Initiative charges totaling $121 million and $190 million, respectively. Excluding these items, adjusted operating profit was $713 million, down 2.2 percent versus the prior year driven by gross profit headwinds partially offset by planned lower marketing, research and general expenses.

Net interest expense was $62 million and in line with the prior year.

The second quarter effective tax rate was 22.6 percent, compared to 13.0 percent in the prior year. On an adjusted basis, the effective rate was 20.9 percent compared to 20.4 percent in the prior year.

Net income of equity companies was $47 million compared to $63 million in the prior year driven primarily by unfavorable currency impacts.

Income from discontinued operations, net of income taxes was $68 million compared to $89 million in the prior year driven primarily by pre-tax separation costs of $33 million, partially offset by a reduction in depreciation and amortization expense of $10 million due to discontinued operations reporting requirements.

Diluted EPS attributable to Kimberly-Clark in the quarter were $1.53 on a reported basis, down from $1.61 in the prior year. These reported amounts are inclusive of charges related to the company's 2024 Transformation Initiative of $0.27 and $0.35, respectively, and $0.12 of IFP related separation charges in the quarter. On an adjusted basis, diluted EPS attributable to Kimberly-Clark decreased 2.0 percent to $1.92 driven by lower adjusted operating profit and lower net income of equity companies.

Year-To-Date Results

For the first half of the year, sales of $8.2 billion decreased 4.0 percent primarily due to an approximately 3.4 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 an approximately 1.7 percent negative impact from foreign currency translation. Organic sales grew 1.2 percent primarily from a 2.3 percent increase in volume, partially offset by price investments of 1.2 percent, while portfolio mix was broadly in line with a year ago.

For the first half of the year, gross margin was 36.1 percent, inclusive of $135 million, or approximately 160 basis points, of charges related to the 2024 Transformation Initiative. Excluding these charges, adjusted gross margin was 37.7 percent, down 120 basis points versus the prior year driven 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, partially offset by strong productivity gains.

Year-to-date operating profit was $1.2 billion, including $196 million of costs related to the company's transformation initiative. Year-to-date adjusted operating profit was $1.4 billion in 2025 versus $1.5 billion in 2024, a decline of 4.7 percent. This decline included an unfavorable impact from currency translation of 120 basis points and the gross profit headwinds discussed above, partially offset by planned lower marketing, research and general expenses.

Year-to-date effective tax rate was 23.1 percent, compared to 18.8 percent in the prior year. On an adjusted basis, the effective rate was 20.8 percent compared to 21.8 percent in the prior year. The first half of 2025 benefited from the resolution of certain tax matters.

Net income of equity companies was $91 million compared to $124 million in the prior year driven primarily by unfavorable currency impacts.

Income from discontinued operations, net of income taxes was $171 million compared to $191 million in the prior year driven primarily by pre-tax separation costs of $33 million, partially offset by a reduction in depreciation and amortization expense of $10 million due to discontinued operations reporting requirements.

Through the first half of the year, diluted EPS attributable to Kimberly-Clark were $3.23 on a reported basis, compared to $3.52 last year. Excluding the impacts of the 2024 Transformation Initiative and IFP related separation charges, year-to-date adjusted EPS attributable to Kimberly-Clark were $3.85 compared to $3.97 last year down 3.0 percent including a currency translation headwind of 280 basis points.