Kimberly-Clark Streamlines Operations with $1.5 Billion Costs: A Step Towards Financial Success Amidst Weak Retail Inventories

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

Kimberly-Clark, the Kleenex tissue maker, announced on Wednesday that it will be reorganizing into three business units in an effort to simplify operations and reduce costs. The Irving, Texas-based consumer goods maker expects to incur about $1.5 billion in related costs 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.

As a result of these challenges, Kimberly-Clark has been forced to restructure its operations. The company’s new organizational structure consists of its business in North America, the international personal care segment, and the international family care and professional businesses. Previously, Kimberly-Clark had three business segments, each with three geographic sub-divisions.

The 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. This is a significant step towards improving the company’s financial position and increasing its competitiveness in the marketplace.

Kimberly-Clark 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. Additionally, 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 in January, Kimberly-Clark cautioned that weak retail inventories could result in flat volumes in the first quarter. As a result of this announcement, Kimberly-Clark’s shares were up 1.5% before the market opened. Overall, this restructuring is a positive move for Kimberly-Clark as it positions itself for long-term success amidst challenging market conditions.

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