Key facts
- Kimberly-Clark lowered its annual sales and profit forecasts due to a significant hit to second-quarter sales in China.
- False social media claims about toxic formamide in Huggies diapers negatively impacted demand in China.
- Volumes in North America declined slightly due to inflation affecting consumer spending.
- The company now expects 2026 organic sales growth to trail category growth by 100 basis points.
- Annual adjusted earnings per share growth is now projected at a high-single-digit rate on a constant-currency basis.
- Net sales increased by 0.6% to $4.19 billion in the second quarter.
Kimberly-Clark announced on Tuesday that it has reduced its annual sales and profit forecasts, citing a significant negative impact on its second-quarter sales in China. The company attributed this downturn to circulating false claims on Chinese social media alleging that its Huggies diapers contained toxic formamide. Despite independent testing by a government-certified third party confirming the quality and safety of the diapers, demand was affected.
In addition to the China disruption, Kimberly-Clark experienced a slight decrease of 0.3% in volumes for its North American business during the second quarter. This was attributed to persistent inflation and higher prices for food and gas in the United States, which led lower-income consumers to reduce their spending.
The company now anticipates that its 2026 organic sales growth will trail the weighted average growth of its categories and markets by approximately 100 basis points. This is a revision from its previous forecast, which predicted growth in line with or above the category average. Furthermore, Kimberly-Clark expects annual adjusted earnings per share to grow at a high-single-digit rate on a constant-currency basis, a reduction from its earlier projection of double-digit growth.
Kimberly-Clark also recently finalized the sale of a 51% stake in its international tissue business to Suzano, forming the $3.4 billion Arbex joint venture. For the three months ending June 30, net sales rose by 0.6% to $4.19 billion, falling slightly short of analyst expectations. Adjusted operating profit increased by 6.2% to $757 million, supported by one-time tariff refunds, productivity gains, and favorable currency movements.