KMB Q2 Earnings Call Focuses on China Risk, 2026 Outlook Cut

KMB Lowers 2026 Outlook on China Disruption

Senior vice president, CFO and interim principal accounting officer Nelson Urdaneta said organic sales were about 100 basis points below internal expectations, mainly due to China, North American trade inventory reductions and softer category growth.

Adjusted EPS from continuing operations was $1.80, which missed the Zacks Consensus Estimate of $2.00. Net sales of $4.19 billion missed the Zacks Consensus Estimate of $4.23 billion.

CFO Urdaneta said 2026 organic sales growth should run about 100 basis points below weighted category growth, currently 2% on a trailing-12-month basis. Adjusted operating profit is expected to grow mid-single digits, while adjusted EPS from continuing operations is expected to grow high single digits, both on a constant-currency basis.

Kimberly-Clark Sees a Gradual China Recovery

President and COO Russell Torres said independent third-party testing found the company’s products safe, while management is working with Chinese authorities, retailers and consumers after social-media allegations hurt diaper sales.

Torres said sellout trends had not deteriorated sequentially but had not turned higher. Management therefore assumed modest improvement rather than a clear inflection.

Answering a UBS analyst, Urdaneta said China should create about a 200-basis-point sales headwind in the second half and roughly $70 million of operating profit pressure, split about evenly between the third and fourth quarters.

KMB Backs a Second-Half North America Pickup

A Goldman Sachs analyst pressed management on weaker North American results and the basis for a stronger second half. Urdaneta said consumer-category shipments fell 1.4% while consumption rose 0.3%.

Urdaneta attributed the gap mainly to the Los Angeles distribution-center fire and retailer inventory movements. The fire reduced second-quarter sales by about $22 million, while inventory changes cut shipment growth by roughly 100 basis points year over year.

Torres said KMB expects North America to grow in line with its categories in the second half, supported by innovation, activation plans, revenue-growth-management actions and easier comparisons.

Kimberly-Clark Uses Pricing and Productivity

A Barclays analyst asked about pricing as promotions evolve. COO Torres said low-single-digit pricing actions are primarily being taken in North America to address inflation.

Urdaneta said second-half gross input-cost headwinds are estimated at about $150 million. He expects mitigating actions and the second-quarter tariff refund to keep pricing net of cost inflation roughly neutral for the full year.

Urdaneta also said KMB received a $45 million North American tariff refund and delivered 6.4% productivity, helping adjusted operating profit and earnings exceed internal expectations.

KMB Advances Kenvue and Its Fiber Platform

A Deutsche Bank analyst asked whether integration work implied higher or faster Kenvue synergies. Torres said progress mainly increases confidence in achieving the existing $1.9 billion cost-synergy target, without committing to more synergies or a revised cadence.

Chairman and CEO Michael Hsu said closer review has increased confidence in growth opportunities across Kenvue’s consumer-health categories. Urdaneta said a specific 2027 earnings view will wait for more clarity on China, commodities and transaction timing.

Hsu highlighted Kimberly-Clark’s alternative natural-fiber program, while Urdaneta said related spending and capital needs are already reflected in strategic plans. Hsu said the company is breaking ground on a pilot facility.

Kimberly-Clark Keeps Execution in Focus

Hsu described the operating environment as choppy but continued to emphasize differentiated product technology, brand investment and productivity as KMB’s operating approach.

Torres reinforced that stance, pointing to innovation and value propositions across price tiers rather than heavier promotion. Management remains focused on China, inflation and North American volatility while preparing for Kenvue.

KMB's Zacks Rank and Style Scores

KMB carries a Zacks Rank #3 (Hold), with Value and Growth Scores of C, a Momentum Score of F and a VGM Score of C. Under the Zacks A-to-F hierarchy, those grades sit below the preferred A and B range.

The Zacks framework gives its strongest short-term emphasis to Zacks Rank #1 (Strong Buy) or #2 (Buy) stocks paired with A or B Style Scores. KMB does not have that combination, and its Zacks Rank can change as earnings estimates are revised following the just-reported results. You can see the complete list of today’s Zacks #1 Rank stocks here.

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