Kimberly-Clark to Make Strategic Changes in Its Western and Central European Businesses

Oct. 31, 2012 - Kimberly-Clark in its third quarter earnings statement on Oct. 24 said that it has decided to make "strategic changes" in its Western and Central European Businesses

In its earnings statement, K-C said, "These moves are intended to improve underlying profitability and to focus the company's resources and investments on its strongest market positions and growth opportunities that can deliver more sustainable returns going forward.

"The changes will primarily affect the company's consumer businesses, with a modest impact on K-C Professional. These changes will not impact the company's Eastern European consumer business, which is part of K-C International, or K-C's health care operations in Europe.

"The company will be exiting the diaper category in Western and Central Europe, with the exception of the Italian market, and will be divesting or exiting some lower-margin businesses in certain markets, mostly in the consumer tissue segment.

"The company will also streamline its European manufacturing footprint and administrative organization to align its cost structure with these strategic decisions. Five manufacturing facilities will be sold or closed and some production will be transferred to other facilities to improve overall profitability. Total workforce reductions as a result of these actions are expected to be in a range of 1,300 to 1,500 positions.

Restructuring costs for these actions will be incurred through 2014 and are expected to total $250 to $350 million after tax ($300 to $400 million pre-tax). Cash costs are projected to be approximately 50 to 60 percent of the total charges. The businesses that will be exited or divested generate annual net sales of approximately $500 million and negligible operating profit. The company will exclude the restructuring costs when it reports adjusted results in future periods.

The company expects that $210 to $260 million of the after tax charges ($240 to $300 million pre-tax) will occur in the fourth quarter of 2012, while lost sales from the restructuring actions are not anticipated to be significant until 2013.

SOURCE: Kimberly-Clark