Kimberly-Clark Corporation (K-C) has unveiled the next phase of its growth strategy that it said will “catapult” the company into its next chapter.
The next phase of growth will include changes to its operating model and key commercial initiatives that it said are designed to grow its brands and businesses at a faster pace than its categories.
Mike Hsu, Chairman and Chief Executive, said: “Over the past five years, our global team’s dedication and strong execution have positioned us to fully leverage the scale we’ve built and to catapult Kimberly-Clark into its next chapter of growth.
“We are building on the consumer centricity and commercial advantages we’ve established by moving to a more agile and focused operating structure that we are confident will help accelerate our proprietary pipeline of innovation in right-to-win spaces and improve our growth trajectory, profitability, and returns on investment.
“We have more than 150 years of history, transforming ground-breaking insights into innovative categories.
“We are excited to build on the strength of that legacy as we drive for consistent, long-term value creation.”
Its growth initiatives will include:
-Accelerating Pioneering Innovation to capture significant growth available in its categories by investing in science and technology to satisfy unmet and evolving consumer needs. K-C will focus on growing 12 “powerhouse brands” that have number one or strong number two positions, and that drive more than 80% of the company’s net sales in five spaces with a total addressable market of $240bn: Baby & Child Care, Feminine Care, Adult Care, Family Care, and Professional.
-Optimising its margin structure to deliver superior consumer propositions at every rung of the price-value ladder. K-C will implement initiatives and deploy technology and data analytics designed to create a fast, adaptable, integrated supply chain with greater visibility that can deliver continuous improvement. It said the planned supply chain modernisation is expected to generate more than $3bn in gross productivity and $500m in working capital savings that will be used to help fuel growth investments.
-Wiring its organisation for growth to drive agility, speed, and focused execution that extends the company’s competitive advantages further into the future. In the coming months, K-C plans to reorganise its operations into three business segments:
1/ North America: A business that currently generates approximately $11bn in sales annually and a 23% operating profit margin that will leverage its significant scale to amplify value creation, drive an end-to-end cost transformation, and accelerate innovation into fast-moving consumer need spaces through 11 brands across consumer and professional channels.
2/ International Personal Care (IPC): A segment with approximately $6bn in sales annually and low-to-mid teens operating profit margins that is focused on three core categories ꟷ Baby & Child Care, Feminine Care and Adult Care. IPC is designed to drive strong growth and improved profitability by scaling a proven growth model, with focused investments in five Core Markets that make up approximately 60% of segment sales. In the 50 Enterprise Markets that make up the balance of the business, the company will seek to improve growth trajectories, profitability and returns on investment by optimising routes-to-market while harmonising and simplifying product portfolios.
3/ International Family Care and Professional (IFP): A business that currently generates $3.5bn in sales annually and approximately 10% operating margins. IFP will bring together K-C’s international consumer tissue business with its international professional business to capture synergies and establish shared resources globally. The segment will focus on improving its business mix and profitability by growing six brands in five large Family Care and five Professional markets while capturing significant margin potential by leveraging shared technology platforms, and efficiently deploying and scaling the best of its business.
The company expects to complete its transition to the new organisational structure by the end of 2024.
100% Natural Forest-Free Ambition
Hsu added that sustainability will continue to be a critical component of the company’s innovation strategy.
He said that over the past decade, the company has explored “an extensive array of alternative fibre options, investing significantly in developing more sustainable products.”
Based on progress against existing goals, Kimberly-Clark is setting a new ambition to be 100% Natural Forest Free across its product portfolio.
The company expects to be more than halfway to this goal by 2030.
