Kimberly-Clark Will Up Adspend, Down Workforce,

26 July 2005

In what some see as a kneejerk reaction to the imminent ingestion of Gillette by Procter & Gamble, Kimberly-Clark (top brands Kleenex, Scott, Huggies, Kotex) plans to close twenty plants, shed ten percent of its workforce and increase its current adspend over the next four years by an additional $160 million (€133m; £92m).

Chairman/ceo Thomas J Falk believes these measures are necessary to "instill financial discipline throughout the company, invest in businesses and opportunities with high-growth potential and support those businesses that already command strong positions in their markets."

The jobs ax will fall primarily in KC's more mature markets - the US and western Europe - allowing the diversion of resources to what Falk (an acronym freak) calls "the Bicrit countries": Brazil, India, China, Russia, Indonesia and Turkey. Sales across these nations rose 18% in Q1 this year.

The closures and decimation of jobs will generate $675 million to $725 million in after-tax charges in total over the next three and a half years. But Falk calculates the cuts - $300m to $350m in annual savings - will save nearly twice that by 2009.

Meantime, there is nothing in the company's current business performance to suggest the need for such draconian cutbacks. Second quarter sales rose 8.1% to a record $4 billion with 3% of that sum accruing from currency gains.

Data sourced from AdAge (USA); additional content by WARC staff