Kimberly-Clark Addresses Challenges in Chinese Diaper Business

In its second quarter earnings call earlier this week, Kimberly-Clark noted that Chinese sales were negatively impacted by false claims that its diapers tested positive for formamide. In June, Chinese state media reported that popular infant diaper brands—including Huggies, Babycare, and Bibabebe—tested positive the chemical, an industrial solvent and reproductive toxicant. While these claims were refuted through a multi-government agency investigation, the report was widely circulated via social media and negatively impacted second quarter sales. 

“There really is no scientific evidence backing the claims,” says COO Russ Torres. “We did make multiple independent tests conducted by certified third-party labs that confirmed that our products are safe and they were non-detect tests.”

He added that the company is continuing to cooperate with the Chinese authorities who are managing the issue. And its strategy is to continue to invest aggressively behind reinforcing the fact about its products and communicating quickly with transparency to consumers.

According to the company, the disruption will cut full-year organic growth by about 3-4 percentage points in the International Personal Care segment and reduce operating profit growth by 10-12 percentage points.