Tissue giant Kimberly-Clark (K-C) has announced a global restructuring plan that will cut 13% of its workforce and sell or close 10 manufacturing facilities.
In its year-end results, the company said its 2018 Global Restructuring Programme is expected to reduce its structural cost base and enable it to invest in its brands, growth initiatives and “capabilities critical to delivering future growth”.
Savings will be driven by workforce reductions – anticipated to be in a range of 5,000 to 5,500 – and some 10 manufacturing facilities will be shut down or sold.
The restructuring is expected to impact all of K-C’s business segments and organisations in each major geography and will see the company exit or divest some low-margin businesses in its consumer tissue business segment.
A spokesman for K-C told TWM that the company is not providing specifics on the status of any of its production facilities or the proposed job reductions until final decisions are made and announced.
He said: “The timing of those announcements will be determined by the needs of the business and appropriate consultation and/or negotiations with unions, works councils and other labour stakeholders.”
Production capacity at several other sites will also be expanded to improve overall scale and cost.
Once completed, it’s expected that the programme will generate annual pre-tax cost savings of $500 to $550m by the end of 2021.
K-C reported fourth quarter 2017 net sales of $4.6bn, an increase of 1% year-on-year, and full-year 2017 net sales of $18.3bn which were up slightly.
Operating profit for the three months ended 31 December 2017 was down 3% to $812m.
Its consumer tissue segment recorded fourth quarter sales of $1.5bn, a drop of 1%.
Volumes and net selling prices for the sector each fell 1%, while currency rates were favourable by less than 2%.
Fourth quarter operating profit decreased 13% to $258m, impacted by lower sales and input cost inflation.
Sales in North America decreased 4% and volumes were down 2%, driven by lower bathroom tissue volumes.
Sales in developing and emerging markets increased 4% and volumes increased 3%.
In developed markets outside of North America, sales increased more than 3% although volumes declined 3%, primarily in Western/Central Europe.
Chairman and chief executive Thomas J. Falk said: “In 2017, we delivered bottom-line growth in a challenging environment.
“Although we expect market conditions will remain challenging in the near-term, we plan to deliver better results in 2018 while we begin to implement our new restructuring.
“We expect organic sales to return to growth while improving our margins and delivering double-digit growth in adjusted earnings per share.
“In addition, we will increase investments in our brands, our growth initiatives and the capabilities we need for long-term success.”
He said the restructuring programme was “the biggest restructuring we have undertaken” since the introduction of the Global Business Plan in 2003.
“It will make our company leaner, stronger and faster. The changes we are making will improve our underlying profitability, provide more flexibility to invest in growth opportunities and help us compete even more effectively,” he added.