Kimberly-Clark Streamlines Operations, Cuts Costs: Details of the Restructuring Plan

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

Kimberly-Clark Streamlines Operations, Cuts Costs: Details of the Restructuring Plan

Kimberly-Clark, the renowned tissue maker known as Kleenex, announced on Wednesday that it will be restructuring into three business units in an effort to streamline its operations and cut costs. The Texas-based consumer goods manufacturer expects to incur about $1.5 billion in related expenses over the next three years, with half of that amount being cash costs. Although the company did not disclose the exact number of jobs to be cut, these costs will primarily be linked to workforce reductions.

The restructuring comes at a time when Kimberly-Clark is facing declining sales due to inflation-stricken customers opting for more affordable alternatives and challenges from losing shelf space at retailers to cheaper private-label products, just like its competitors Procter & Gamble and Unilever.

Kimberly-Clark’s newly organized segments will consist of its North American business, the international personal care segment, and the international family care and professional businesses. Previously, the company had three business segments, each with three geographic subdivisions. The company’s 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 expects to complete its transition to the new organizational structure by the end of 2024. These actions are expected to deliver approximately $200 million in selling, general, and administrative savings over the next few years. 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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