Kimberly-Clark (NASDAQ:KMB) has completed its acquisition of Kenvue and is beginning a multiyear integration, with executives saying on the company’s third-quarter earnings call that they remain on track to deliver about $1.9 billion in cost synergies.
Chairman and CEO Mike Hsu said the combined company’s immediate priorities include keeping operations running smoothly, strengthening both companies’ brands and investing for growth. The new organizational structure and operating model were implemented this week, he said.
“We want to be able to ship product, pay suppliers, and pay people,” Hsu said, describing the practical focus of the integration’s first phase. The company plans to use the first 100 days to maintain operations and capture early savings, followed by a focus on establishing a foundation for growth in 2027.
Synergies and earnings outlook
CFO Nelson Urdaneta said Kimberly-Clark remains on track with the deal assumptions it laid out a year ago, including its synergy plans and its goal of reaching approximately two times leverage by the end of the transaction’s second year.
Of the roughly $1.9 billion in expected cost synergies, about one-third is expected from overhead optimization, including some role eliminations and other administrative savings. Urdaneta said approximately 30% to 40% is expected from cost of goods sold, including distribution and procurement savings. The remaining category includes sales, marketing and trade-spending efficiencies.
Hsu said significant staffing changes are planned throughout 2027. The companies will initially run separate systems before gradually moving Kenvue businesses onto Kimberly-Clark’s platforms.
Hsu said he believed the company could exceed its publicly stated synergy expectations. Urdaneta said some savings had already materialized after Kenvue began organizational changes earlier in 2026, and that the company would provide more detail on the timing of savings at CAGNY.
Separately, Vice President of Investor Relations Chris Jakubik said the company had identified $1.4 billion in revenue synergies, with about $200 million in net operating profit contribution after reinvestment. Urdaneta clarified that those revenue opportunities were separate from the $1.9 billion cost figure.
For 2027, Urdaneta confirmed the company expects adjusted earnings per share dilution of no more than the mid-single digits compared with standalone Kimberly-Clark. He said Kimberly-Clark will retain amortization of intangible assets in its non-GAAP measures, unlike Kenvue’s previous practice.
For 2028, the company expects mid- to high-single-digit EPS growth on a two-year compounded basis versus standalone Kimberly-Clark’s 2026 baseline, Urdaneta said.
North America and China face headwinds
Hsu described the underlying health of Kimberly-Clark’s North American business as solid, despite a soft quarter. Retailer inventory changes represented a roughly 130-basis-point headwind in the period, he said. The company also postponed a major product launch until likely early 2027 because a new manufacturing asset was not producing the desired quality.
Distribution changes at club retailers also weighed on baby care. Urdaneta said club distribution in diapers and training pants represented about a one-percentage-point headwind for North America during the quarter. Outside club, Hsu said share across baby and child care was slightly higher overall.
Tissue was a bright spot: Urdaneta said Kimberly-Clark gained 20 basis points of weighted share in the category during the quarter. Hsu said the company’s e-commerce business was growing by more than 20%.
In China, Hsu said diaper demand had stabilized and improved slightly after a social media controversy involving what he described as false allegations. He said Chinese authorities had confirmed the safety and quality of Huggies products, but that rebuilding consumer trust would take time.
Urdaneta said the China business was still expected to be subdued in the fourth quarter. Before the controversy, he said, Kimberly-Clark had approximately 20% share in China diapers and had gained share for five consecutive years.
Kenvue brands and investment plans
Hsu said Kenvue’s organic growth was about 3% in the third quarter and pointed to improving performance across several brands. He said Tylenol sales were up by a low- to mid-single-digit percentage for the year, while Nicorette was up about 7% and Zyrtec about 5% year to date.
Other areas need attention. Hsu said Kenvue’s skin care business was down slightly less than 1% year to date against a category that was up about 4%. Listerine was down about 2% year to date, he said. He called for improvements in skin care assortment and creative execution, and a simpler, clearer offering for Listerine.
Urdaneta said the company expects a gradual return toward category-level growth in its newly acquired categories, supported by increased marketing, innovation and research spending. Portfolio changes, including product assortment reductions, could have near-term effects as the company positions the business for longer-term growth, he said.
Costs and fourth-quarter expectations
Urdaneta said Kimberly-Clark’s standalone 2026 outlook reflects stronger underlying momentum than the third-quarter headline results suggest, alongside a fourth-quarter commercial program and cost-mitigation actions. He also noted an easier comparison with the prior-year fourth quarter in North America.
The company continues to project approximately $250 million in gross inflationary impacts for the full year, including about $200 million in the second half. That forecast was unchanged from the update provided in September, Urdaneta said, after a rise in North American spot freight rates increased the expected impact from the company’s August estimate.
Hsu said full-year pricing is expected to be relatively flat. Executives also said they would preserve flexibility to invest in the business, rather than sacrifice longer-term opportunities to meet a short-term number.
About Kimberly-Clark (NASDAQ:KMB)
Kimberly-Clark Corporation (NASDAQ:KMB) is a global consumer products company that develops and markets personal care, tissue and professional hygiene products. Its portfolio includes products for babies and children, feminine care, adult care, family care and workplace hygiene.
The company’s well-known brands include Huggies diapers and wipes, Kleenex facial tissue, Cottonelle bathroom tissue, Scott toilet paper and paper towels, Kotex feminine care products, and Depend, Poise and GoodNites products.
-limited-logo-1200x675.png){kind=logo}
