Kimberly-Clark’s third quarter saw a positive response from the market as management highlighted volume and mix-led growth despite a flat sales environment. The company leveraged new product introductions and a focus on innovation across its product tiers to maintain market share in a competitive landscape. CEO Michael Hsu explained that “our inflection to volume plus mix-led growth that began last year continued into the third quarter,” attributing performance to meeting customers’ needs throughout the value spectrum. The company also benefited from strong productivity initiatives and a rewired organizational structure aimed at driving operational consistency.
Is now the time to buy KMB? Find out in our full research report (it’s free for active Edge members).
Kimberly-Clark (KMB) Q3 CY2025 Highlights:
- Revenue: $4.15 billion vs analyst estimates of $4.15 billion (flat year on year, in line)
- Adjusted EPS: $1.82 vs analyst estimates of $1.75 (3.9% beat)
- Adjusted EBITDA: $859 million vs analyst estimates of $841.9 million (20.7% margin, 2% beat)
- Operating Margin: 15%, down from 24.8% in the same quarter last year
- Organic Revenue rose 2.5% year on year vs analyst estimates of 1.5% growth (99.2 basis point beat)
- Market Capitalization: $33.2 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kimberly-Clark’s Q3 Earnings Call
- Javier Escalante (Evercore ISI) asked about competitive dynamics in U.S. diapers given increased private label and imports. CEO Michael Hsu and COO Russ Torres explained the company’s innovation-led approach and use of promotions to drive trial, noting market share gains.
- Lauren Lieberman (Barclays) requested clarity on the profit and loss outlook for 2026-2027 considering the Suzano joint venture. CFO Nelson Urdaneta discussed expected operating profit growth, mitigation of stranded costs, and the step-up in EPS from continuing operations post-transaction.
- Peter Grom (UBS) questioned strong North American performance versus tracked trends. Management attributed it to channel mix shifts, especially digital and club, which are less visible in scanner data, and clarified shipment timing effects from hurricane disruptions last year.
- Christopher Carey (Wells Fargo) probed deeper into the impact of increased promotional activity on competitiveness and margins. Torres and Hsu reiterated the focus on targeted promotions for innovation trial, while Urdaneta projected operating margin stability despite higher marketing spend.
- Anna Lizzul (Bank of America) asked about competing in the ultra-premium diaper segment and reducing fiber cost volatility. Hsu and Urdaneta highlighted a strong pipeline of premium innovations and the strategic benefits of the Suzano partnership in stabilizing input costs.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the pace of premiumization and customer adoption of new product innovations, (2) progress on mitigating input cost volatility and achieving targeted margin improvement, and (3) continued market share trends in key channels such as club and digital. The development of the Suzano joint venture and the effectiveness of promotional strategies will also be important signposts.
Kimberly-Clark currently trades at $100.21, down from $116.78 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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