Thank you so much. Good morning, everyone.

Hope you're all doing well and thanks for participating on our call. As usual, we'll provide some brief remarks, and then we'll open it up for questions.

We had another strong quarter and a good first half of the year with record revenue behind the strong performance in our consumer products businesses, continued double-digit increases in gross profit, operating profit, and EBITDA, and EBITDA margin at the top end of our range. Our strategies and actions are having the intended impact, spearheaded by strong commercial and operating execution, and we continue to make progress on our KCM+ innovation, growth, and transformation strategy.

More on that after Xavier takes you through our second quarter results. Xavier?

Thank you. Good morning, everyone.

During the quarter, our sales were 14.4 billion pesos, a 2.7% increase versus the second quarter of 2025 and an all-time high. Total volume was up 3.1%, driven by consumer products, while price and mix was flat.

Net sales were led by consumer products, which grew 5.2% with a 4% volume increase and 1.2% price and mix growth, while away-from-home decreased 5.1%. Exports were down 11.1%.

Cost of goods sold decreased 3%. Our cost reduction program, once again, had very good results and yielded approximately 450 million pesos of savings during the quarter.

These savings are mainly at the cost of goods sold level. They were generated through a combination of global fiber contracting initiatives, changes in sourcing and the use of alternative fibers, product redesigns, and the introduction of new raw materials in nonwoven fabrics, diaper geometry redesigns to improve material efficiency, and logistics and distribution efficiencies across our network.

These initiatives reflect ongoing actions across procurement, product design, manufacturing, and logistics. In addition to these actions, compared to last year, fibers and fluff were favorable, while superabsorbent materials and resins compared negatively.

The FX was lower, averaging around 11% less than last year. Gross profit increased 11.9% and margin was 41.6% for the quarter.

SG&A expenses were 11.5% higher year-over-year, and as a percentage of sales were up 140 basis points. Distribution expenses were higher, while we continued to invest behind our brands and worked to improve our footprint and streamline logistics operations.

Operating profit increased 12.2% and operating margin was 23.7%, up 50 basis points sequentially. We generated 3.9 billion pesos of EBITDA, a 9.6% increase year-over-year, with EBITDA margin at 27.1%, above the long-term range, representing 40 basis points sequential improvement.

Cost of financing was 417 million pesos in the second quarter compared to 352 million pesos in the same period last year. Net interest expense was higher since we have more debt.

During the quarter, we had a 50 million pesos FX gain compared to a 20 million pesos gain last year. Net income for the quarter was 2 billion pesos, a 9% increase.

Earnings per share was 68 cents, a 9.7% increase. We maintain a very strong and healthy balance sheet.

Our total cash position as of June 30 was 19.6 billion pesos. Our net debt to EBITDA ratio was 0.9 times with EBITDA to net interest coverage of 9 times.

Thank you.

As mentioned, we had a strong first half of the year despite still subdued economic growth and private consumption. As we move into the second half, we expect consumer products businesses to continue to lead the way, the away-from-home business to grow during the second half of the year, and parent roll sales will be lower due to more tissue required for consumer product sales, but becoming less of a drag as the year goes on.

All in all, we expect stronger revenue going forward. With respect to raw material costs, fundamentals support lower dollar prices versus last year, but given the current geopolitical tensions, oil derivatives will be higher both sequentially and versus last year.

We expect prices will return to underlying market fundamentals by end of year. In the meantime, we will accelerate our price realization efforts and stay focused on operational efficiencies and ensuring another good year in our cost reduction efforts.

Of greater importance, we continue to make good progress on our KCM+ strategies. Our core businesses are performing well, and our diamond categories are accelerating growth behind consumer-centric, relevant, and differentiated innovation, together with greater engagement and improved commercial execution.

Further, we continue to make inroads in private label and continue to work with our strategic partner to strengthen the North American supply chain. When it comes to new areas of growth, we continue to make progress on pet food and are actively analyzing the Kenvue opportunity.

All in all, our KCM+ initiatives focused on accelerating growth are going well. Equally important, our efforts to develop our skill set, better utilize data, work closely with our retail partners, and transform our end-to-end cost structure are gaining momentum.

As we've mentioned before, effectively deploying and efficiently utilizing the most advanced technology solutions is the fundamental layer to support and drive all these efforts, and time is of the essence. We hope these comments provide a good picture of where we stand.

With that, we open the call for questions.

Thank you, operator. Pablo, Pablo, Xavier.

Thank you for the space for questions, and congratulations on the results. I have two quick ones if I may.

The first one, Pablo, I wanted to see if you can elaborate a little bit, what are the main differences driving growth for the consumer segment relative to the away-from-home segment? Right, we have seen a couple of quarters where there's a big difference in terms of growth in top lines.

If you can elaborate a little bit why is there such a big difference, and I know that you said you expect better growth for away-from-home going forward. What's going to change for the second half?

Maybe the last one would be regarding the Kenvue deal, if you have any updates in terms of timing of the conversations. Should we expect maybe more color towards the third quarter or the fourth quarter?

Thank you very much.

Thanks, Alejandro. Thanks for the questions.

Both very, very important. Look, as you've mentioned, we've had very good quarters on the consumer side, and that's driven by strong innovation behind our brands and relatively strong market shares plus making inroads in certain opportunities that we've identified.

Doing well both in our core categories and accelerating our growth in our diamond categories. Overall, I would say consumer products is going well, particularly when it comes to volume.

We're pretty happy with that performance, and we're working hard to make sure that continues. When it comes to away-from-home, we've been talking a little bit about one, distributors being a little bit more careful given the economic scenario.

Now, what we also saw happening is that they became a little bit more aggressive betting on the outcome on consumption given the World Cup experience. What we actually saw is that those expectations did not materialize, and as a result, really competition to drive volumes intensified and that negatively impacted pricing.

We did see in away-from-home sequentially volume improvements, but pricing was affected because of this competition, again, to get more volume into the market. That may continue here in at least July, but we expect that to subside as the year progresses and have inventories and the business return to more normal levels.

It will still probably be lower growth rates because, again, the economic conditions are not conducive for our distributors to supply more products to restaurants, to hotels, etc., but we do expect it to come back to growth end of this quarter and certainly in the fourth quarter of the year. I hope that helps when it comes to consumer versus away-from-home.

When it comes to the Kenvue acquisition, we are very, very actively working on it with our partner, and I would think that during this third quarter, we will have more information on that front.

Perfect. Gracias, Pablo.

Thank you, Alejandro.

Thank you so much. Good morning, Pablo, Xavier, and thanks for taking my questions.

Pablo, your export business was down year-on-year, but up quarter-on-quarter, right? You mentioned master rolls being down.

How should we think about the mix and how are you thinking about sales over the balance of the year? Then I was hoping, given the outlook for some of the inputs over the balance of the year, how are you thinking about industry pricing dynamics, particularly during the summer selling season, but from this position of strength with respect to your shares right now?

Thanks, Bob. Thanks for the questions.

First on the export business, yeah, you're right. Our export of finished product was down versus last year, but it was up sequentially.

Our export of parent rolls was also down versus last year, but was also up sequentially. This has to do, particularly on the export of finished products side, with a couple of things.

One, the exchange rate differential, of course, versus last year. Two, that we were comparing to a record quarter in exports finished product sales last year.

Third quarter was also pretty strong. A slightly lower volume demand from our partner.

It was really timing in the second quarter, and there'll be a little bit of that in the third quarter. As overall, we've been working with our partners to position ourselves to strengthen the North American supply chain, and we still believe that's the case and we're finding good opportunities.

Over a longer period of time and certainly for next year, our expectation is for strong growth certainly in that business. When it comes to parent rolls, again, it depends on how much we consume internally, and we're consuming more internally because of how strong our performance has been in consumer products.

We're also finding ways to produce more. Hopefully, we'll be able to find here a combination where we can both use more internally, but also supply more externally, and at least have that be less of a drag as we move forward.

When it comes to the cost side, again, hard to say how long this will last. We expected this to be a very short time and with relatively lower impact, but it's dragged on for a little longer, I think, that pretty much everyone expected.

It didn't get as bad as also some people expected it could get, but it has certainly had an impact. We will see some of that impact in costs here in the third quarter.

Hopefully, as we mentioned, you go back to fundamentals, those support lower dollar prices in our raw materials, hopefully we get back to that by the end of the year. Having said that we will see more pressure on this quarter, we still expect to be within the range of our EBITDA margin target for the quarter, notwithstanding those cost pressures.

Again, hopefully even improving in the fourth quarter as we move along. Now, given that this is happening, we will continue to monitor any opportunity for price realization.

It's always tough during the promotional summer season, and this one has been particularly aggressive. Again, as consumption has been subdued, some of the retailers and some of our competitors have been a little bit more aggressive.

It's really hard at this time to really reflect pricing, but we also expect that to start to die down as this July passes and certainly into August and definitely through September. We'll continue to look for opportunities on price realization to be able to absorb some of these cost increases.

Again, even if we're not able to do that, we are expecting to be able to deliver EBITDA margins within our target range. No,

understood. If I could just follow up, Pablo, you touched on private label in your comments.

I was curious if you're seeing a downtrade within your own price tiers. How are you thinking about participating in private label and the equilibrium with the branded side of the business?

Sure, that's a great question, Bob. What we're seeing, not different from other economies, is we're seeing what many are calling the K-shape, right?

Consumers who are buying premium products continue to do so. We do see some consumers on the value segment trending down to economy segment, and in some cases trending down to private label offerings, particularly when it comes to hard discounters and some of the more economy-driven formats, for example, Bodega Aurrerá, etc., where there's also a big push to help consumers and provide these products at a lower cost.

Certainly that dynamic is happening. As our strategy has always been to have this multi-tier, multi-brand offerings with superior products in every tier to all of the private label offerings out there.

That'll continue to be the norm, and that'll continue to be our strategy. We'll bring innovation behind that very aggressively in the coming quarters and certainly into next year.

We've got a really, really nice pipeline that we put into place this year, and we love how it looks going forward. That will certainly help.

We've also said that we want to be more strategic about participating in private label. Given that it's a trend that continues, and certainly something that retailers want to push forth, we see an opportunity for growth there if we participate.

We're making inroads. We're working with quite a few of them and starting to supply some of their products, gaining that traction, momentum, confidence, or trust with them to build that business.

What we're going to have really is have our private label where we can supply it compete with our brands for consumers preference. Again, on the one hand, multi-tier and continued innovation to stay a step ahead, and on the other, providing very good products for private label to be able to meet the demand of both our customers and our clients.

A dual strategy which starting to pay off, but a lot, lot more to do there, a lot of room for improvement and growth. No,

very helpful, Pablo. Thank you so much.

Thank you, Bob.

Hi, good morning. Congrats on your results.

Actually following up on the last answer that you provided, could you share more light on how much is private label as a share of sales, how much has it been growing within Kimberly-Clark, and maybe how much of potential do you see there? Also within innovation, how much of that innovation is addressing both the tradeoff or the tradedown, the K-shape economy?

Thanks.

Sure, Antonio. Private label still a small business for us.

We expect that maybe this year it'll be around 800 million pesos. That's about double what we did last year.

Again, with expectations that it can continue to grow at a very interesting clip in the next couple of years as we gain traction behind our initiatives. A lot of focus there to make that happen.

In terms of innovation, really the strong performance behind consumer products, diapers, bathroom tissue, feminine care, incontinence, both on our core categories and some of our diamond categories is supported by strong innovation. We've been able to in every category bring new products to market, of course together with a good commercial execution.

From new offerings in Cottonelle in bathroom tissue to new offerings in pretty much every tier in our diaper business, and we will be introducing more innovations in the premium side of the business this year to improvements in the value and economy tier in the wipes business, and a new product line in feminine care, a new product line in incontinence. I would say that it's broad-based, and that is in very important way why we've been able to continue to grow at a very good clip in consumer products despite the consumer environment.

Makes sense. Thanks.

Look forward to the color. Have a nice day.

Thank you, Antonio.

Hey, thanks for taking the question. I was just wondering with I guess another quarter with savings around 450 million pesos and EBITDA margins holding above the long-term target range, sort of how much of the current savings run rate would you consider structural versus timing-related?

As we look towards 2027, how sustainable are these current margin levels and what do you expect the raw material and FX conditions as that plays out?

Hello. The way we account for the cost savings is we only include cost savings that are for the most part for the long term.

These are things that we can add on 1 year and go forward. They're more structural than conjectural.

All right.

That was your question, right?

Then also sort of how you see I guess material costs play out over the course of the year.

Yeah. Let me just touch a little bit on what Xavier said in terms of this being structural, and we mentioned in our comments a couple of the things, but maybe that's useful.

Because, for example, when we were generating savings through global fiber contracting initiatives and changing sourcing in different raw materials, of course that's structural. We were out there, I'm going to say around the world looking for sourcing of the best prices in our materials, and when we find that, it doesn't end there.

We continue to look for the best sourcing possible, and we've been able to source materials from different parts of the world that preferred costs. That's one example of the things we continuously do.

That's really structural because it's behind our culture, just being out there and making sure we find the best opportunities. The same can be said for product redesigns and some other efficiencies.

Again, always looking to structurally improve our cost structure and our efficiencies. Going forward, as we say, hard to tell.

If it was just fundamentals, we should be seeing lower dollar prices in most of our raw materials because there's quite a bit more in many of them, quite a bit more supply than demand, and in many areas of the world, subdued domestic consumption. That's being interrupted because of the current geopolitical tensions.

How long that lasts, it's anyone's guess. Right now, we will see an impact, but eventually we believe we will see those raw materials come back to fundamentals and that will support lower costs.

Certainly, that together with our efficiencies and our cost efforts help us continue to deliver good margins and certainly within our target range. This was the 13th consecutive quarter within or above our range, and we certainly expect that to continue as we move into the rest of the year and 2027.

All right. Thank you.

Appreciate it.

You're welcome.

Hello, gents. Thank you very much for taking my question.

Another question on private label. Pablo, how do you define the point where more private label starts hurting the branded business?

I don't know if it's through the price gaps, the shelf space, or even these consumers trade down, but away from your portfolio. How do you decide when to lean into private label to keep your plant utilization high and maybe even contain competition versus stepping back to protect your branded mix?

That's my first question. The second, this extra gain on margins ahead of the guidance range, given the overall weak consumer backdrop that we're seeing, how much of this extra gain you think you should need to invest into pricing or marketing into the second quarter, or this is something that you think can go throughout the year and really go above the guidance for the full year?

Thank you.

Let me start by this second one, Froylan, and thanks for the question. Again, as we said, on the cost side, the third quarter will certainly be more challenging sequentially and to some degree versus last year because of everything that we mentioned so far, particularly when it comes to oil derivatives.

Eventually, we'll see that come down, but certainly the third quarter will be a little bit more challenging. Having said that, we do expect to be able to deliver within our target range.

As things come back to the fundamentals, we will see better costs and that should be helpful going forward. That's on the cost side.

On pricing, again, we'll continue to look for opportunities for price realization. It is clear that as we're in the summer promotional season and the economies are not growing much, there's quite a bit of pricing going into the market and so it won't be that easy to be able to achieve higher pricing within the quarter, but still we think we'll be able to deliver.

Now, we won't be able to surpass what we did in the second quarter, but we should be able to deliver within our target range and improve on that for the fourth quarter assuming costs get on a better footing and the promotional season and pricing aggressiveness starts to die down. As that's usually what happens in the third quarter every single year.

It's not a surprise, it's not uncommon. It's just that now we have the cost pressure also on top of that.

When it comes to private label again and leaning into it, it's a combination of all of the things you've mentioned, right? There's a trend given that the economy has not really grown too much over the past decade, and inflation has been higher, consumers are stretched.

It's become more of a trend that they're really trying to look for offerings out there where they can make their money last longer and be worth more. It is a trend.

We expect that to continue because we see no big catalysts for the economy to improve, we expect the consumer to continue to be stretched. Given that it's a trend, we want to make sure we participate, but at the same time, we will compete as we've always done with our brands through innovation and commercial execution to be able to provide offerings at every tier in the market.

It'll be a dynamic that will unfold here for the coming years, and we want to make sure we participate in both, and we want to make sure we're successful in both and that helps us drive revenue growth for the company.

Very clear. Thank you very much.

Thank you.

Hi, Pablo, Xavier. Good morning.

Regarding consumer product which deliver 5% of growth, could you provide more color in the categories and commercial initiatives driving this performance and how you see the growth opportunity going forward, please?

Sure, Nicolas. Thanks for the question.

When it comes to consumer products, we see our core categories, that's bathroom tissue, diapers, napkins, our biggest categories with strong performances, let me call it low to mid-single digit. Of course, those are the biggest categories, those are to some extent driving the overall growth.

Then our diamond categories, which are those where we see greater opportunity because of penetration, distribution, greater usage, etc., like for example, wipes, incontinence, feminine care, even our Evenflo bottles, etc. Those we're seeing high single-digit growth.

Overall, a good mix of growth in all of our categories, and again our shares being strong, and we expect that to continue going forward.

Thank you. If I may, another.

This quarter, the margin was above your long-term range. Could you help us understand how do you think about the sustainability of this margin in the second half?

Thank you.

Sure. Again, the margin was higher because we had both strong performance from consumer products behind volume, but there was also a little bit of price and mix in there, plus we had good costs during the quarter.

As I've mentioned, costs during the third quarter, given geopolitical tensions, will be higher, particularly when it comes to oil derivatives. We expect within the quarter to deliver EBITDA margin within our target range, most likely not at this rate of 27% or 27.1% that we delivered this quarter, but within our target range.

As the geopolitical tensions subside and raw material costs come back to fundamentals, then we expect to be able to improve on the performance of the third quarter. It'll be probably, assuming that the cost fundamentals come back by the end of the year, it'll be a mixed second half with probably the fourth quarter being stronger than the third.

Again, very important, in all cases, our margins being within our target. As we've said, this was the 13th consecutive quarter within or above our range, and we expect that to continue for the rest of the year and into 2027.

Thank you so much.

Thank you, Nicolas.

Hi, good morning, Pablo, Xavier and all the team and congrats on another solid quarter. Thanks for the space for questions.

Just a quick one here regarding the dynamics on SG&A expenses. I suspect there's some brand and top-line reinvestments and that there, but also there might be some impact of higher fright or distribution expenses, I don't know.

I just want to be sure what you're expecting here, what's a breakdown if possible, and what are you seeing for the coming quarters? Thank you very much.

First, hello.

The main things that you're seeing in SG&A beyond what you already mentioned of investing behind the brands, which is key given all the things that we've talked about and which has been one of the drivers behind the performance of our consumer products, the other thing that you see there, which is growing more than the top line, is compensation-related expenses or provisions, particularly the profit sharing. As we pay 10% of profit sharing directly, and we've been doing that for many years or many, many, many, many years.

That, together with other compensation-related items, add to the SG&A. I don't know if you, Pablo, have something else.

Now that's true. The other thing that we're seeing there, particularly when it comes to the sales side, is more use of the technology and information platforms of our customers, and of course they're trying to monetize that and we're participating and we're making very, very good use of that information to figure out trends, to figure out what's happening in the market, and determine our strategies and commercial execution.

That is increasing year-over-year. It'll certainly won't look that way next year, but for this year there's an important increase in that line item, and it'll continue again being an important increase versus last year, and then as we get into next year, we shouldn't see that line item increase as significantly as it has right now.

Very important to have access to that information. Very importantly, we're using it very, very aggressively with our technology and even with artificial intelligence agents to be able to take advantage of all that knowledge that's in there.

Super clear. Thank you very much.

Thank you so much for taking the follow-up question. I was curious with respect to Kenvue, do you need any additional debt to close on Kenvue or do you expect to wrap up the transaction with existing resources?

Then I was curious, how are you and KCC thinking about Kenvue markets in Latin America outside of Mexico?

Thanks, Bob. Thanks for the question.

Our discussion with Kimberly-Clark is strictly for the Kenvue Mexico business. We're trying to figure out what's the best structure for the deal going forward.

That's really where we stand. Assuming this goes forth, we absolutely would be able to deliver on it with our current structure, certainly adding some of Kenvue's, because as given the products that they sell, they have a sales force that visits doctors, etc., that is a key item or key element of how they do business, a very important one.

It would be a combination, but for the most part, with our structure, we would be able to just handle that incremental growth.

Understood. From a financing perspective again, no need for additional debt.

You've got it on the balance sheet, you can close this pretty quickly, correct?

Financing shouldn't be an issue.

Thank you. Appreciate it.

Thank you so much and again, congratulations on the quarter.

Thanks, Bob. Appreciate the questions.

No, just thank you for participating in the call. I hope you all have a wonderful summer, and looking forward to having our conversation after the third quarter.

Just thanks again.