Kimberly-Clark reported net sales of US$4.13 billion in the third quarter of 2026, down 0.4% compared with the same period last year. Organic sales declined 1.3%, reflecting the impact of social media allegations affecting Huggies in China and retailer inventory movements in North America.
Adjusted operating profit decreased 0.9% to US$677 million, while adjusted gross margin declined 130 basis points to 35.5%. The margin pressure reflected unfavorable pricing relative to cost inflation and supply chain investments, partially offset by productivity savings.
Reported operating profit fell 16.9% to US$516 million. Adjusted diluted earnings per share from continuing operations increased 17.2% to US$1.70, primarily supported by lower net interest expense and a lower adjusted effective tax rate. However, adjusted EPS attributable to Kimberly-Clark, including discontinued operations, declined 6.6% to US$1.70.
Net income attributable to Kimberly-Clark increased to US$1.79 billion in Q3 2026, compared with US$446 million a year earlier. Diluted earnings per share rose to US$5.37 from US$1.34, reflecting the impact of the gain from the July 1 sale of a majority stake in its International Family Care and Professional business to Suzano.
North America
In North America, net sales increased 0.9% to US$2.74 billion, while organic sales grew 0.4%. Volume increased 2.0%, supported by growth in Family Care and Professional categories, despite promotional activity and retailer inventory movements, which reduced organic sales growth by approximately 130 basis points.
Operating profit in the region rose 2.7% to US$657 million, supported by productivity savings and lower advertising spending.
Despite the softer quarter, management highlighted continued strength in tissue, which gained 20 basis points of weighted market share in North America. Kimberly-Clark Professional also continued to gain market share, while e-commerce sales grew by more than 20%.
Management attributed part of the North American weakness to changes in club-channel distribution for diapers and training pants, as well as the postponement of a new product launch due to manufacturing quality issues. The launch is now expected in early 2027.
International Personal Care
International Personal Care recorded a 2.8% decline in net sales to US$1.40 billion, with organic sales down 4.6%. Growth in South Korea, Indonesia and Enterprise Markets was more than offset by an approximately 770-basis-point impact from the China disruption.
Operating profit in the segment decreased 32.7% to US$144 million, reflecting higher input costs and the impact of the disruption, partially offset by productivity savings.
The weakness in China followed social media allegations that Huggies diapers contained formamide, an industrial chemical. In October, a joint investigation by Chinese authorities concluded that no formamide had been detected in the tested diaper products, including samples from 180 brands, and identified deficiencies in the testing procedures behind the original claims.
Despite the investigation's findings, Kimberly-Clark said demand had only stabilized and improved slightly, with consumer confidence expected to take time to recover. The company is increasing transparency around its manufacturing operations and communicating directly with consumers. Management expects the business to remain subdued in the fourth quarter.
Nine-month results and outlook
For the first nine months of 2026, Kimberly-Clark reported net sales of US$12.49 billion, up 1.0% year on year, with organic sales growth of 0.3%. Adjusted operating profit increased 3.0% to US$2.17 billion, while adjusted EPS from continuing operations rose 8.5% to US$5.10.
Cash provided by operations reached US$2.4 billion, compared with US$1.8 billion in the same period last year. Capital spending totaled US$1.0 billion.
The company reaffirmed its 2026 standalone outlook, expecting organic sales growth to be approximately 100 basis points below its weighted-average category growth, estimated at 1.7%. Adjusted operating profit is expected to increase by mid-single digits and adjusted EPS from continuing operations by high single digits, both on a constant-currency basis. Adjusted EPS attributable to Kimberly-Clark is expected to decline by a low-single-digit percentage.
The organic sales outlook incorporates approximately 100 basis points of realized and potential headwinds from the China disruption. The guidance excludes the effects of the Kenvue acquisition.
Kimberly-Clark completed its acquisition of Kenvue on November 2, 2026, following the end of the third quarter. The company also completed the transaction involving its International Family Care and Professional business on July 1, 2026, with the business subsequently reported as discontinued operations.
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