TEXAS (From news reports) -- Kimberly-Clark slashed its annual profit forecast on Tuesday as the Kleenex tissue maker said it would incur about $300 million in costs this year due to U.S. President Donald Trump's broad trade tariffs.
While Trump's efforts to impose import taxes on goods from major U.S. trading partners and many core products are expected to lead to a surge in prices for American consumers, Kimberly-Clark has said it manufactures a vast majority of its products domestically, with imports from Canada, Mexico and China representing less than 10% of the U.S. cost of goods sold.
"The current environment will now mean greater costs across our global supply-chain versus our expectations at the beginning of the year," Kimberly-Clark CEO Mike Hsu said. However, he also said the company would be able to offset these costs over time.
Shares of the company, which sells tampons, diapers and baby wipes, were down about 3% in early trading after it missed quarterly revenue estimates.
"While we expect most companies to cut or at least guide to the low end of the 2025 outlook this quarter, we think the tariff impact of $300M was greater than anticipated," said J.P.Morgan analyst Andrea Teixeira.
The company's forecast cut mirrors that of U.S. industrial conglomerate 3M Co's expectations of a hit to profits as tariff tensions mount.
Kimberly-Clark now expects adjusted earnings per share to be flat-to-positive on a constant-currency basis in 2025, compared to its prior expectations of profit growth in a mid-to-high single-digit percentage range.
Price reductions and a demand slowdown led to revenues in its biggest North America segment declining 3.9% in the first quarter ended March 31, while International Personal Care sales slumped 8.9%. Overall, quarterly sales for the company fell 6% to $4.84 billion, compared to estimates of $4.88 billion, according to data compiled by LSEG.
CEO Hsu said that the North America business "will bear the brunt" of the incremental costs from the latest enacted tariffs as the company also absorbs the impact of exiting its private label diaper business.
Kimberly-Clark exited the business to focus on its core personal care technologies, such as those used in sanitary napkins. It also initiated a business restructuring last year to control costs.
On an adjusted basis, it earned $1.93 per share, compared with analysts' expectation of $1.89 per share.
Kimberly-Clark is one of the first U.S. consumer goods makers to report results this quarter, throwing light on how an escalating global trade war could impact the sector. Industry bellwether Procter & Gamble is scheduled to report quarterly earnings on Thursday.
