Kimberly-Clark, the Texas-based multinational personal care products behemoth and maker of such iconic brands as Kleenex, Kotex, Cottonell, Scott, and Huggies, will be FORCEing out approximately 5,500 employees in a company-wide restructuring.
The restructuring plan is part of the FORCE (Focused On Reducing Costs Everywhere) which is targeted to reduce costs by $1.5 billion by 2021. In addition to eliminating approximately 13 percent of its workforce and 10 manufacturing facilities, look for the ripple effect to swamp various contractors and vendors that rely on Kimberly-Clark for a substantial portion of their revenue.
According to a press release aimed at Kimberly-Clark investors, Chairman and Chief Executive Officer Thomas J. Falk announced:
"In 2017, we delivered bottom-line growth in a challenging environment. We also achieved all-time record FORCE cost savings of $450 million and reduced discretionary spending to help offset inflationary cost headwinds. In addition, we returned $2.3 billion 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. In addition, we will increase investments in our brands, our growth initiatives and the capabilities we need for long-term success. We will also continue to allocate capital in shareholder-friendly ways."
"We believe that, over time, our 2018 Global Restructuring Program will accelerate our return to delivering on our long-term growth objectives. This is the biggest restructuring we have undertaken since the introduction of our Global Business Plan in 2003, and 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. At the same time, we are expecting our ongoing FORCE program to continue to deliver significant results and are making that clear by establishing a multi-year commitment to this program. Combined, our restructuring and FORCE programs will generate more than $2 billion of total cost savings over the next four years, giving us substantial funds to drive profitable growth. Today's announcement is the latest example of Kimberly-Clark's proactive and strategic approach to improving our business so we can win in the marketplace and create long-term shareholder value."
To be noted, more people are accepting of private-label branding (manufactured by name-brand companies) and purchasing large quantities of personal care products at big-box discount stores which reduces the number of purchases and increases the exposure to private-label equivalents.
Additional details of finances and the restructuring plan can be found on the Kimberly-Clark investor website.