Kimberly-Clark Streamlines Operations with $1.5 Billion in Costs

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

Kimberly-Clark, the maker of Kleenex tissues, has announced that it will be reorganizing into three business units in an effort to streamline operations and reduce costs. The Irving, Texas-based consumer goods company expects to incur about $1.5 billion in related expenses over the next three years, with cash costs accounting for approximately half of that amount. These expenses 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 diminishing returns from consistent price hikes and a decrease in sales due to inflation-stricken customers opting for more affordable alternatives. The company is also facing challenges from losing shelf space at retailers to cheaper private-label products.

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.

The transition to the new organizational structure is expected to be completed 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. Kimberly-Clark has also reaffirmed its annual organic net sales and adjusted profit targets provided in January. In January, the company 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.

Kimberly-Clark, the maker of Kleenex tissues, has announced that it will be reorganizing into three business units in an effort to streamline operations and reduce costs. The Irving, Texas-based consumer goods company expects to incur about $1.5 billion in related expenses over the next three years, with cash costs accounting for approximately half of that…

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