US paper products giant Kimberly-Clark – makers of Andrex and Kleenex – is to axe up to 13% of its global workforce in a major restructuring programme.
The company also plans to sell or close up to 10 manufacturing plants, moving production to its remaining factories in a bid to drive up efficiency.
It is not known how many UK plants will be affected – the firm has manufacturing sites in Northfleet, Barrow and Flint, together with offices in Brighton, Reigate and West Malling.
In its annual report published today, Kimberly-Clark says the aim of the global restructuring programme is to cut the company’s structural costs and make the manufacturing supply chain less complex.
Return to growth
“Over time, the programme is expected to accelerate the company’s return to delivering sales and earnings growth in line with its global business plan objectives,” says the report.
The company hopes the cost-cutting measures to generate annual pre-tax savings of $500m to $550m by the end of 2021.
Redundancies are expected to be between 5,000–5,500, roughly 12% to 13% of current workforce, and will be spread across all the company’s global business divisions.
As part of the programme, Kimberly-Clark expects to exit or sell some low-margin businesses in the consumer tissue business.
Chairman and chief executive Thomas J. Falk said, “In 2017, we delivered bottom-line growth in a challenging environment. We also achieved all-time record cost savings of $450m. In addition, we returned $2.3bn to shareholders through dividends and share repurchases.
“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.”
The company’s fourth-quarter results, also published today, show sales of $4.6bn, up 1% compared with same period in 2016, while operating profit was $812m compared with $839m in Q4 2016.
However, changes in currency exchange rates benefited sales by more than 1%, and organic sales fell about 1%. In North America, organic sales were down 3% in consumer products and up 1% in commercial sales. Outside North America, organic sales increased 4% in developing and emerging markets but fell 3% in developed markets.
Over the full year, net sales were up slightly at $18.26bn in 2017, compared with $18.20bn for 2016, generating operating profits of $3.3bn – down $18m on the previous year.