May 24, 2024 1:32 am
Kimberly-Clark Set to Reorganize Business, Face $1.5 Billion in Costs

Kimberly-Clark, a leading tissue product manufacturer based in Irving, Texas, has announced plans to restructure its operations into three business units in order to simplify operations and reduce costs. The company anticipates about $1.5 billion in related expenses over the next three years, with approximately half of this amount expected to be cash costs, primarily from workforce reductions.

The restructuring comes as Kimberly-Clark faces challenges such as decreasing profits from price hikes and reduced purchasing by customers due to inflation. Additionally, the company is experiencing loss of shelf space at retailers to more affordable private-label alternatives. The new organizational structure will consist of three segments: North American business, international personal care, and international family care and professional businesses.

Kimberly-Clark had previously operated with three business segments divided into three geographic sub-divisions each. The company’s supply chain modernization efforts are expected to yield over $3 billion in gross productivity and $500 million in working capital savings. These savings will be reinvested in growth initiatives. The transition to the new organizational structure is scheduled to be completed by the end of 2024.

Overall, the company expects the restructuring to result in $200 million in selling, general, and administrative savings over the next few years. Kimberly-Clark has also reiterated its annual organic net sales and adjusted profit targets provided earlier in the year. Despite missing fourth-quarter sales and profit estimates in January, the company remains optimistic about its future performance. Prior to the announcement, Kimberly-Clark’s shares had increased by 1.5%.

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