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

Kimberly-Clark Announces $1.5 Billion in Costs for Simplification of Operations, Job Cuts Unknown

Kimberly-Clark, the maker of Kleenex tissues, has announced that it will be reorganizing into three business units in a bid to simplify operations and reduce costs. The company expects to incur approximately $1.5 billion in related expenses over the next three years, with half of that amount being cash costs. The specific number of jobs to be cut was not disclosed.

The restructuring comes as Kimberly-Clark is facing challenges from inflation-stricken customers opting for more affordable alternatives and losing shelf-space at retailers to cheaper private-label products. Like its competitors Procter & Gamble and Unilever, Kimberly-Clark is also experiencing diminishing returns from consistent price hikes.

Kimberly-Clark’s reorganized segments will now 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.

The company expects to complete its transition to the new organizational structure by the end of 2024. These actions are projected 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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