On Tuesday, August 4, Kimberly-Clark, the American company, announced a downward revision of its sales and profit expectations for the year 2026. The controversy surrounding toxic children’s diapers in Mainland China has impacted Kimberly-Clark’s second-quarter sales.
According to the Economic Information Daily, a media outlet under Xinhua News Agency, just before the “618” shopping festival in June, test results showed that Huggies, a brand under Kimberly-Clark, along with two Chinese brands – Babycare and Bibabebe, tested positive for high levels of the carcinogenic substance Formamide. Inhaling Formamide can irritate the skin, eyes, and respiratory system.
This news immediately grabbed attention and quickly became the number one trending topic on Weibo.
Huggies diapers, produced by Kimberly-Clark’s Kleenex brand, have production lines in Mainland China. China Huggies swiftly referenced third-party independent authoritative testing results recognized by the Chinese government to prove that none of their products tested positive for Formamide. They also proactively contacted the testing organizations mentioned in the Economic Information Daily’s report and commissioned multiple independent inspections. However, the negative impact from Chinese state media reports could not be appeased.
In response to this ripple effect, Taiwan Huggies promptly submitted their diaper products to internationally recognized third-party testing agencies – SGS and Intertek – for inspection, confirming that “no Formamide was detected.”
Some Taiwanese parents expressed that the latest expedited inspection report provided by Huggies can reassure consumers, emphasizing that if there were indeed quality issues with the diapers, it would have surfaced long ago, not waiting until this incident.
Mike Hsu, Chairman and CEO of Kimberly-Clark, discussed the impact of the issue on Tuesday, saying, “While we are cautiously optimistic in some aspects, I believe events like these are happening more frequently, and consumers are becoming more discerning.”
“We also understand that resolving this issue will take some time,” he added.
Kimberly-Clark is proceeding with its planned acquisition of Kenvue, a healthcare products company, for approximately $40 billion, expected to be completed by the end of the year.
Currently, Kimberly-Clark anticipates that organic sales growth in 2026 will be approximately 100 basis points lower than the weighted average growth rates of its various categories and markets, falling below the previously expected flat growth.
Russ Torres, Chief Operating Officer of Kimberly-Clark, referred to the disruption in the Chinese market as a “one-time external impact,” which is expected to decrease the organic growth rate of its international personal care business by 3 to 4 percentage points and lower this year’s operating profit growth rate by 10 to 12 percentage points.
Kimberly-Clark’s second-quarter net sales increased by 0.6% to $4.19 billion, slightly lower than analysts’ expectations of $4.22 billion. Adjusted operating profit increased by 6.2% to $757 million, primarily attributed to approximately $45 million in tariff refunds.