Kimberly-Clark Corp. 2026 Q2 Earnings Call

Thank you, Chris, thank you all for joining us today. Hey, as I mentioned in our prepared remarks, our second quarter results demonstrate the durability of the growth engine we've built through Powering Care. We delivered our 10th consecutive quarter of solid volume plus mix performance, held global weighted share, posted another quarter of industry-leading gross productivity, continued to invest for impact. We did this even as consumers remain pressured and category growth is moderating. At the same time, results were impacted by a few discrete but significant one-off items in the quarter that underpin our decision to adjust our full-year outlook. Despite these headwinds, the fundamentals of our business remain strong, we're confident in our momentum entering the second half and into 2027. Our teams are executing with speed, agility, and great care to manage the business with discipline and navigate external dynamics.

We're delivering superior science-backed innovation and value propositions around the world through our proven repeatable playbook that positions us to continue to win with consumers. We're advancing the next phase of Kimberly-Clark's transformation and sharpening our focus on proprietary Right to Win spaces. Yesterday, we unveiled a proprietary alternative natural fiber innovation program, which has the potential to reshape the future of our industry. This is the culmination of more than two decades of materials and plant science expertise brought to life through Powering Care. We believe the program will enhance product performance for consumers, strengthen our long-term growth trajectory, reduce exposure to natural forest fiber cost volatility, and advance our natural forest fiber free ambition. We also completed the successful launch of Arbex, our strategic joint venture with Suzano. We're making strong progress on our integration planning for Kenvue as well. We're excited and ready for what's next.

We have a unique generational opportunity to create a new kind of health and wellness company, reimagine care for billions of people around the world, and to create lasting value for shareholders. With that, we'd like to open up the line for questions.

Yeah, I'll take that one. Hey, Nik, it's Russ. Yeah, I would say the main message is that we're very confident in our products. We make high-quality products that are safe and perform well. We think that's going to lead the way to a recovery over time. Just a little more context, and I'll maybe make three points. First, there really is no scientific evidence backing the claims. We did, as we noted in the remarks, make multiple independent tests conducted by certified third-party labs that confirmed that our products are safe, and they were non-detect tests. Second, in terms of how we're handling it, our team is doing an excellent job navigating the situation. We're continuing to cooperate with the Chinese authorities who are managing the issue.

Our strategy really is to continue to invest aggressively behind reinforcing the facts about our products and communicating quickly with transparency to consumers, and obviously engaging stakeholders like retailers and government agencies. We've gotten excellent support from all the stakeholders, which we're really grateful for. Third, in terms of the outlook, and what we expect going forward, we are not seeing any sequential deterioration in our sellout in China, but it also hasn't inflected positively yet. We think we've been appropriate in the outlook for the balance of the year considering that uncertainty. While we are cautiously optimistic in some areas, I think these incidents have been occurring with greater frequency, and consumers are pretty smart and getting savvy about these things. We're also realistic that it's going to take a little time to kind of work through this.

Hopefully that gives you some sense.

Nik, it's Mike. I'll just tag on. One, given kind of the social media environment, this is not the first time that's occurred to us. It probably is the largest, though. I would say, our purpose as a company is better care for a better world, and we take our responsibility to consumers as paramount in that, and we would never trade that off. We're very confident in the quality of our products, and so we believe we'll get this back to the right place. I would like to add, Nick, though, that brand foundations globally remain strong in the face of some of the discrete impacts, including the China issue that we're working through. Just to point out, I think I made this in my prepared remarks, we're still sustaining positive volume plus mix growth. I think our 10th consecutive quarter of that.

Even in the quarter, I'd say, holding overall weighted share in the quarter, although on the old cohort approach, up or even in about 70% of sales across the world. I think we feel good about our brand fundamentals, and we're confident we'll be able to navigate this issue.