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Kimberly-Clark Reinvents itself: Invests $1.5 Billion in Reorganization

The company seeks to simplify operations and address financial challenges through a restructuring in three business units

Kimberly-Clark has announced a reorganization in three business units, seeking to streamline its operations and reduce costs. The Irving, Texas-based company plans to incur about $1.5 billion in related costs over the next three years, with about half in cash, primarily from workforce reductions.

This restructuring occurs against a backdrop where the company is facing declining profits due to ongoing price increases and competition from cheaper private label brands, affected by inflation. Like its competitors Procter & Gamble (PG.N) and Unilever (ULVR.L), Kimberly-Clark is also losing shelf space at retailers.

The new business units will include the North American business, the international personal care segment and the international professional and family care businesses. Previously, the company had three business segments with geographic subdivisions.

The supply chain modernization is expected to generate more than $3 billion in gross productivity and $500 million in working capital savings. The transition to the new organizational structure is expected to be completed by the end of 2024, with projected savings of about $200 million in sales, general and administrative over the next several years.

Kimberly-Clark also reaffirmed its annual targets for organic net sales and adjusted earnings, despite missing fourth-quarter estimates in January and warning of possible flat volumes in the first quarter due to weak retail inventories. The company’s shares were up 1.5% before the market opened.

Source
Reuters
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