Kimberly Clark (NYSE: KMB) has announced plans to eliminate up to 5,500 jobs as well as closures of about 10 plants due to sluggish sales and a congested production base. The maker of Kleenex tissue and Huggies diapers aims to cut $500 million to $550 million in costs before 2022 through a restructuring plan that would streamline and simplify the manufacturing supply chain and overhead. Cost reductions will be funded by savings from the recent federal tax cut while the company looks to expand production at other sites, already with operations in about 56 countries.
Last year, Kimberly Clark reported $18.3 billion in sales while net income jumped 22% to $617 million. However, Kleenex sales have been declining due to a slower birth rate. Shoppers have also moved to purchasing consumer goods online, which has hurt online business since it only represents 10% of the business. Following the federal tax reform, Kimberly Clark as well as other companies were forced to recalculate tax burdens, making the overall tax rate drop to a range of 23% to 26% compared to 29.7% in the fourth quarter.