DALLAS-- Kimberly-Clark Corporation (Nasdaq: KMB) today reported second quarter 2026 results reflecting sustained, innovation-driven volume-plus-mix gains and industry-leading productivity that more than offset several significant, discrete unfavorable impacts.
'Our achievements in the first half of the year show that Kimberly-Clark's durable operating model is enabling us to accelerate our transformation while sustaining the momentum of our brands and businesses,' said Kimberly-Clark Chairman and CEO Mike Hsu. 'Our team is executing with agility and addressing discrete headwinds that will moderate our growth and earnings potential in 2026. We continue to invest in our innovation-led growth agenda and superior brand propositions that win with consumers across the value spectrum. Combined with industry-leading gross productivity savings, we're ensuring that our base business is well positioned to drive sustainable growth in 2027 and beyond.'
Hsu continued, 'We also made significant strides to advance the next phase of Kimberly-Clark's Powering Care strategy. We successfully launched our strategic joint venture with Suzano: Arbex. We entered the next phase of development of our next-generation, sustainable materials innovation platform by announcing the construction of an alternative natural fibers pilot plant in the Southwest of the United States. Our pending acquisition of Kenvue remains on track to close by the end of this year. In sum, our vision for a new kind of health and wellness company, reimagined care for billions of people around the world, and lasting value for shareholders is becoming clearer by the day.'
The Company also noted that its second-quarter results were negatively impacted by a discrete disruption stemming from false allegations regarding the quality of certain diaper brands in the China market. Independent testing conducted by a government-certified third party confirmed the quality and safety of the Company's products, refuting the false allegations. While the Company is effectively navigating the situation, the impact from the spread of false claims across social media significantly impacted the Company's diaper sales in China in the second quarter and is expected to further impact sales and profits in the near term.
Quarter Highlights
Unless otherwise noted, reported results in this release are based on continuing operations and exclude the International Family Care and Professional ('IFP') business, which is reported as discontinued operations.
Delivered net sales of $4.2 billion, up 0.6 percent, with organic sales growth broadly in line with the prior year.
Gross margin was 38.3 percent; adjusted gross margin was 38.8 percent, up 190 basis points versus the prior year.
Operating profit for the quarter was $633 million, while adjusted operating profit was $757 million, up 6.2 percent versus the prior year driven by one-time tariff refunds, strong productivity savings and favorable currency impacts, partially offset by business exits and the China social media disruption, planned investments to drive new product trial and supply chain related investments.
Diluted earnings per share ('EPS') from continuing operations were $1.22; adjusted EPS from continuing operations were $1.80, up 10.4 percent versus the prior year.
Diluted EPS attributable to Kimberly-Clark were $1.04; adjusted EPS attributable to Kimberly-Clark were $2.12, up 10.4 percent versus the prior year.
Second Quarter 2026 Results
Net sales of $4.2 billion increased 0.6 percent, as favorable currency impacts of 1.1 percent were partially offset by the exit of the company's private label diaper business in the US. Organic sales growth was broadly in line with the prior year, including an approximately 50 basis point negative impact from the China social media disruption.
Gross margin was 38.3 percent compared to 35.0 percent in the prior year, inclusive of $22 million, or approximately 50 basis points, and $82 million, or approximately 200 basis points, respectively, of charges related to the 2024 Transformation Initiative. Excluding these charges, adjusted gross margin was 38.8 percent, an increase of 190 basis points versus the prior year as one-time tariff refunds and strong productivity savings were partially offset by planned investments to drive new product trial and improve price:value tiers across the portfolio, as well as supply chain related investments.
Second quarter operating profit was $633 million compared to $592 million in the prior year. Current quarter results included $54 million of charges related to the 2024 Transformation Initiative, $109 million related to the Kenvue acquisition and a $39 million benefit related to Brazil business tax credits. Prior year results included $121 million of charges related to the 2024 Transformation Initiative. Excluding these items, adjusted operating profit was $757 million compared to $713 million, an increase of 6.2 percent, driven by the increase in adjusted gross profit discussed above and favorable currency impacts. These gains were partially offset by an approximate 210 basis point headwind from a combination of business exits and the China social media disruption.
Net interest expense was $49 million versus $62 million in the prior year primarily driven by lower interest expense.
The second quarter effective tax rate was 37.9 percent, compared to 22.6 percent in the prior year. On an adjusted basis, the effective rate was 21.1 percent compared to 20.9 percent in the prior year.
Net income of equity companies was $55 million compared to $47 million in the prior year driven primarily by favorable currency impacts and pricing net of cost inflation, partially offset by higher general and administrative expenses.
Income (loss) from discontinued operations, net of income taxes was $(60) million compared to $68 million in the prior year, inclusive of $72 million and $33 million, respectively, of pre-tax separation costs. Current quarter results also included net tax charges of $107 million related to the impacts from certain reorganization activities associated with the IFP Transaction. Excluding these amounts, adjusted income from discontinued operations was $107 million compared to $99 million in the prior year, an increase of 8.1 percent primarily driven by lower depreciation expense in the current year due to reporting requirements for discontinued operations.
Diluted EPS from continuing operations were $1.22 compared to $1.33 in the prior year. These reported amounts are inclusive of net charges of $0.58 and $0.30, respectively, for the certain items discussed above that management doesn't believe reflect our underlying and ongoing operations. Excluding these items, adjusted EPS from continuing operations were $1.80, an increase of 10.4 percent versus the prior year, driven by higher adjusted operating profit, lower net interest expense and higher income from equity companies.
Diluted EPS attributable to Kimberly-Clark were $1.04 compared to $1.53 in the prior year. These reported amounts are inclusive of net charges of $1.08 and $0.39, respectively, for certain items discussed above that management doesn't believe reflect our underlying and ongoing operations. Excluding these items, adjusted EPS attributable to Kimberly-Clark were $2.12, up 10.4 percent, driven by higher adjusted operating profit and income from discontinued operations.
Year-To-Date Results
For the first half of the year, net sales of $8.4 billion increased 1.6 percent, as organic sales growth of 1.2 percent and favorable currency impacts of 1.5 percent were partially offset by a 1.1 percent decline from the exit of the company's private label diaper business in the US. Organic sales growth was driven by a 1.3 percent increase in volume from broad growth within each segment.
For the first half of the year, gross margin was 37.6 percent compared to 36.1 percent in the prior year, inclusive of $64 million, or approximately 80 basis points, and $135 million, or approximately 160 basis points, respectively, of charges related to the 2024 Transformation Initiative. Excluding these charges, adjusted gross margin was 38.3 percent, up 60 basis points versus the prior year driven by one-time tariff refunds and strong productivity gains, partially offset by unfavorable pricing net of cost inflation and supply chain related investments.
Year-to-date operating profit was $1.4 billion compared to $1.2 billion in the prior year, inclusive of net charges of $103 million and $196 million, respectively, for certain items that management does not believe reflect our underlying and ongoing operations. Excluding these items, adjusted operating profit was $1.5 billion compared to $1.4 billion, an increase of 4.9 percent driven by the increase in adjusted gross profit discussed above and favorable currency impacts, partially offset by a 290 basis point headwind from business exits as well as increased brand investments.
Year-to-date effective tax rate was 30.3 percent, compared to 23.1 percent in the prior year. On an adjusted basis, the effective rate was 23.6 percent compared to 20.8 percent in the prior year. The first half of 2025 benefited from the resolution of certain tax matters.
Net income of equity companies was $108 million compared to $91 million in the prior year driven primarily by favorable currency impacts and pricing net of cost inflation, partially offset by higher general and administrative expenses.
Income (loss) from discontinued operations, net of income taxes was $41 million compared to $171 million in the prior year, inclusive of $104 million and $33 million, respectively, of pre-tax separation costs. Current year results also included net tax charges of $107 million related to the impacts from certain reorganization activities associated with the IFP Transaction. Excluding these amounts, adjusted income from discontinued operations was $232 million compared to $202 million in the prior year, an increase of 14.9 percent primarily driven by lower depreciation expense in the current year due to reporting requirements for discontinued operations.
Through the first half of the year diluted EPS from continuing operations were $2.91 compared to $2.72 in the prior year. These reported amounts are inclusive of net charges of $0.49 and $0.53, respectively, for the certain items discussed above that management doesn't believe reflect our underlying and ongoing operations. Excluding these items, adjusted EPS from continuing operations were $3.40, an increase of 4.6 percent, driven by higher adjusted operating profit, lower net interest expense and higher income from equity companies, partially offset by a higher adjusted effective tax rate.
Diluted EPS attributable to Kimberly-Clark were $3.03 compared to $3.23 in the prior year. These reported amounts are inclusive of net charges of $1.06 and $0.62, respectively, for certain items discussed above that management doesn't believe reflect our underlying and ongoing operations. Excluding these items, adjusted EPS attributable to Kimberly-Clark were $4.09 compared to $3.85 last year, up 6.2 percent driven by higher adjusted operating profit and income from discontinued operations, partially offset by a higher adjusted effective tax rate.
Business Segment Results
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