Summary of Kimberly-Clark's Q1 2026 Earnings Call

1Key Financial Results and Metrics

Organic Sales Growth:: Achieved 3% volume plus mix growth, continuing a trend of broad-based growth over the past two years.

Productivity:: Maintained industry-leading productivity with a target of 6% for the year, consistent with previous years.

Market Share:: Gained market share in key segments including Baby Care, Women's Health, and Active Aging.

Gross Margin:: Slight decline of 60 basis points year-over-year, attributed to the exit from a private label contract, but expected to improve in subsequent quarters.

2Strategic Updates and Business Highlights

Powering Care Growth Engine:: Focused on innovation across product tiers (Good, Better, Best) to drive growth and market share.

Supply Chain Efficiency:: Enhanced supply chain operations to deliver products at lower costs, contributing to reinvestment in brand quality and marketing.

Kenvue Integration:: Preparing to integrate Kenvue brands into Kimberly-Clark’s operating model, aiming to enhance overall business performance and synergies.

3Forward Guidance and Outlook

Full-Year Guidance:: Maintained despite rising commodity costs, with expectations of organic sales growth slightly below Q1 levels in Q2 due to strong prior year comparisons and a $20 million impact from a California distribution center fire.

Cost Management:: Anticipated incremental input costs of $150 million to $170 million in the second half of the year if oil prices remain high, but confident in the ability to offset these through pricing strategies and productivity initiatives.

Margin Expectations:: Projected expansion in gross and operating profit margins for the full year, with an increase of 70 to 80 basis points expected.

4Bad News, Challenges, or Points of Concern

Commodity Cost Pressures:: Rising oil prices and other inflationary pressures pose a risk to profitability, with uncertainty about future costs.

Distribution Center Fire:: The California fire is expected to negatively impact Q2 results by approximately $20 million.

Competitive Environment:: A highly promotional industry landscape in North America complicates pricing strategies, although volume growth remains strong.

5Notable Q&A Insights

Pricing Strategy:: Management emphasized a disciplined approach to pricing, focusing on maintaining margins while navigating cost pressures. They are exploring various levers, including revenue growth management and productivity improvements.

Category Growth:: North America saw a rebound in category growth, with expectations of continued strength despite potential headwinds.

Kenvue Performance:: Challenges in Kenvue's North America skincare and oral care segments were noted, but management expressed confidence in the integration and future growth potential.

Consumer Behavior:: No significant shifts in consumer buying patterns were observed, although consumers remain price-sensitive. Overall, Kimberly-Clark's Q1 2026 results reflect solid operational performance and strategic initiatives aimed at sustaining growth amid external pressures. The company remains cautiously optimistic about navigating challenges while focusing on innovation and efficiency.