Kimberly-Clark Announces New Operating Model; To Incur Approx. $1.5 Bln In Reorganization Costs

(RTTNews) - Kimberly-Clark Corporation (KMB) said the company will focus on driving a step-change in performance by sharpening its strategic focus through a new operating model that leverages three synergistic forces: accelerating pioneering innovation; optimizing margin structure; and wiring organization for growth. Under the new operating model, Kimberly-Clark will focus on growing 12 powerhouse brands. The company will implement initiatives and deploy technology and data analytics designed to create a fast supply chain. The company estimates planned supply chain modernization to generate more than $3 billion in gross productivity and $500 million in working capital savings. Also, in the coming months, the company plans to reorganize operations into three business segments: North America; International Personal Care; and International Family Care and Professional.

Kimberly-Clark expects to complete transition to the new organizational structure by the end of 2024. The actions are expected to generate approximately $200 million of selling, general and administrative savings in the next few years.

Kimberly-Clark has set long-term growth and return targets including: organic net sales growth ahead of market growth; adjusted operating profit growth in the mid-to-high single digits on a constant currency basis; and adjusted EPS growth in mid-to-high single digits on a constant currency basis; and annual free cash flow generation of at least $2 billion. The company expects to incur approximately $1.5 billion in one-time restructuring and reorganization costs, split roughly into 50% in non-cash charges and 50% of cash expenses, over the next three years.

Kimberly-Clark said its 2024 outlook provided in January is consistent with its new long-term growth and return targets. The company continues to expect to deliver a low-to-mid single-digit percentage increase in 2024 organic net sales. Adjusted operating profit is still expected to grow at a high single-digit to low double-digit rate on a constant-currency basis and adjusted earnings per share are expected to grow at a high single-digit rate on a constant-currency basis.