Kimberly-Clark Streamlines Operations and Reduces Costs with $1.5 Billion in Expenses

Kimberly-Clark announces business reorganization, expects $1.5 billion in costs

Kimberly-Clark, the renowned Kleenex tissue maker, has announced plans to restructure into three business units in an effort to streamline operations and reduce costs. The Irving, Texas-based consumer goods manufacturer anticipates incurring approximately $1.5 billion in related expenses over the next three years, with half of that amount being cash costs. The exact number of jobs to be cut was not disclosed.

The company’s reorganized segments will now consist of its North American business, international personal care segment, and international family care and professional businesses. Previously, Kimberly-Clark had three business segments, each with three geographic sub-divisions. The supply chain modernization plans aim to generate over $3 billion in gross productivity and $500 million in working capital savings that will be used for growth investments.

Kimberly-Clark is facing challenges such as diminishing returns from consistent price hikes and a decrease in sales due to inflation-stricken customers opting for more affordable alternatives. Additionally, the company is facing competition from losing shelf space at retailers to cheaper private-label products like its competitors Procter & Gamble and Unilever.

The company expects to complete its transition to the new organizational structure by the end of 2024 and projects it will deliver approximately $200 million in selling, general, and administrative savings over the next few years. Kimberly-Clark has also reaffirmed its annual organic net sales and adjusted profit targets provided in January. In January, Kimberly-Clark fell short of fourth-quarter sales and profit estimates and cautioned that weak retail inventories could result in flat volumes in the first quarter. As a result of the announcement, Kimberly-Clark’s shares were up 1.5% before the market opened.

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