Kimberly-Clark Reports Strong Finish to Second Year of Transformation

Core Insights - Kimberly-Clark Corporation reported fourth quarter and full year 2025 results, showcasing momentum from its innovation-driven growth strategy and significant efficiencies that support brand reinvestment and shareholder returns [1][2]. Financial Performance - Fourth quarter net sales were $4.1 billion, down 0.6%, with organic sales growth of 2.1% offset by a 2.5% decline due to exiting the private label diaper business in the US [4][11]. - Gross margin improved to 35.9% from 35.2% year-over-year, with an adjusted gross margin of 37.0%, consistent with the prior year [5][12]. - Operating profit for the quarter was $507 million, up from $420 million, with adjusted operating profit increasing 13.1% to $629 million [6][10]. - Diluted earnings per share (EPS) attributable to Kimberly-Clark were $1.50, a 11.9% increase from the prior year, while adjusted EPS rose 24.0% to $1.86 [10][18]. Yearly Overview - For the full year 2025, net sales totaled $16.4 billion, a decrease of 2.1%, primarily due to divestitures and currency translation impacts [11][12]. - The full year gross margin was 36.0%, down from 37.4% in the previous year, with an adjusted gross margin of 37.3% [12][13]. - Operating profit for the year was $2.4 billion, consistent with the prior year, while adjusted operating profit remained at $2.7 billion [13][24]. - Diluted EPS for the year was $6.07, down from $7.55, but adjusted EPS increased 3.2% to $7.53 [18][39]. Business Segment Results - North America segment net sales decreased 3.0% in Q4, driven by the exit of the private label diaper business, while organic sales growth was 0.8% [21][22]. - International Personal Care segment net sales increased 4.2% in Q4, with organic sales growth of 4.5% [25][26]. - For the full year, North America segment net sales were down 2.4%, while International Personal Care segment net sales decreased 0.9% [22][26]. Cash Flow and Shareholder Returns - Cash provided by operations was $2.8 billion, down from $3.2 billion, with capital spending increasing to $1.1 billion [29]. - The company returned $1.8 billion to shareholders through dividends and share repurchases, completing share repurchases of 1.1 million shares at a cost of $141 million [29]. 2026 Outlook - The company expects organic sales growth in 2026 to align with or exceed the average growth in its competitive categories, forecasting a mid-to-high single-digit growth rate for adjusted operating profit [30]. - Adjusted EPS from continuing operations is anticipated to grow double digits on a constant-currency basis, driven by a projected 30% increase in income from equity companies [30].