Kimberly-Clark, maker of personal care products and cleaning supplies such as Kleenex, Huggies, and Scott, is forecasting $300 million in additional costs this year related to the Trump administration’s new tariffs, and as a result is lowering its 2025 profit forecast from high single digits to flat.
But the hit to the CPG brand’s bottom line shouldn’t impact prices or investment plans, according to the company’s top brass.
CEO Mike Hsu told shareholders on Tuesday that tariffs won’t translate into price hikes because Kimberly-Clark plans to “mitigate most of the cost by switching sourcing.”
Motivating this approach are competitive pressures, he added, as some rival brands already source more of their products and inputs locally, making any price increase a potential risk.
CFO Nelson Urdaneta said 80% of Kimberly-Clark’s costs are US-based, leaving just 20% exposed to tariffs, with about two-thirds of the $300 million impact coming from the aggregate 145% tariffs recently placed on Chinese goods.
“We’re working fast through actions to mitigate these costs, and frankly, the learnings that we had in the ’21, ’22, ’23 cycle have come in pretty handy,” he said.
Sticking to the plan: In addition to holding the line on pricing, Kimberly-Clark plans to move ahead with its long-term investments, as it chooses to lose profits rather than pare back capital expenditures.
“The reason why we are calling or changing our guidance for the year to about flat in operating profit and EPS has to do with the fact that we do not intend to cut investments behind our innovation and our plans,” Urdaneta said.
In 2024, the company unveiled its “Powering Care” transformation plan. The strategy aims to restructure the company around innovation in order to bring new cutting-edge products to market faster—a process that’s set to continue despite higher costs from tariffs.
“Overall, I would say there’s no impact to the long-term strategy,” Urdaneta said.
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