Simplifying Operations and Cutting Costs: Kimberly-Clark Reorganizes into Three Business Units

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

Kimberly-Clark, the Kleenex tissue maker, announced on Wednesday that it is 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.

This restructuring comes as Kimberly-Clark is facing challenges from decreasing sales due to inflation-stricken customers opting for more affordable alternatives. Like its competitors Procter & Gamble and Unilever, Kimberly-Clark is also 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 consists of its North American business segment, 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 new structure aims to simplify operations and reduce costs by streamlining processes and reducing duplication across segments.

The company expects to complete its transition by the end of 2024 and projects that these actions will deliver approximately $200 million in selling, general, and administrative savings over the next few years. Despite falling short of fourth-quarter sales and profit estimates earlier this year, Kimberly-Clark has reaffirmed its annual organic net sales and adjusted profit targets provided in January 2021. The company cautioned that weak retail inventories could result in flat volumes in the first quarter but shares were up 1.5% before market opened after news was released.

In conclusion, Kimberly-Clark’s restructuring decision is aimed at simplifying operations and reducing costs through a shift into three business units: North America business segment, international personal care segment, and international family care

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