Kimberly-Clark Streamlines Operations with $1.5 Billion Restructuring Plan

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

Kimberly-Clark, the well-known Kleenex tissue maker, has announced that it will be restructuring into three business units in an effort to streamline operations and cut costs. The Irving, Texas-based consumer goods maker expects to incur about $1.5 billion in related expenses over the next three years, with cash costs making up approximately half of that amount. These costs will primarily be related to workforce reductions, although the specific number of jobs to be cut was not disclosed.

This 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. 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’s new organizational structure will consist of its business in North America, the international personal care segment, and the international family care and professional businesses. Previously, the company had three business segments, each with three geographic sub-divisions. 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 addition, Kimberly-Clark has reaffirmed its annual organic net sales and adjusted profit targets provided in January. Despite falling short of fourth-quarter sales and profit estimates earlier this year, the company 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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