Kimberly-Clark Set to Reorganize Business, Face $1.5 Billion in Costs

Kimberly-Clark has announced plans to reorganize its operations into three business units in a bid to simplify operations and reduce costs. The company, known for its Kleenex tissue products, is based in Irving, Texas and anticipates about $1.5 billion in related costs over the next three years. Approximately half of this amount will be in cash costs, with a focus on workforce reductions, although the specific number of jobs affected was not disclosed.

This restructuring comes as Kimberly-Clark faces challenges including decreasing benefits from price hikes and reduced purchasing by customers due to inflation. Like its competitors Procter & Gamble and Unilever, Kimberly-Clark is also experiencing loss of shelf space at retailers to more affordable private-label alternatives. The company’s reorganized segments will now consist of its North American business, international personal care, and international family care and professional businesses.

Previously, Kimberly-Clark had three business segments with three geographic sub-divisions each. The company’s supply chain modernization efforts are anticipated 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 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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