The company expects the layoffs to result in annualized pre-tax savings of about $150 million. Second half results will benefit from expected savings of $60 million, or 10 cents per share. Approximately $110 million of the costs will be recorded in the second quarter. Between $140 million and $150 million in streamlining costs, about 25 cents per share, will be recorded in the second, third and fourth quarters, according to a statement from the Dallas-based company.
Kimberly-Clark, whose shares have declined about 2 percent this year, said the layoffs will be focused on salaried and non-production jobs across all regions. No manufacturing plants will be closed. The job reductions appear to be the biggest the company has made since 2005 when it shed 6,000 jobs.
"These actions, while difficult, are necessary to help us emerge from this demanding economic environment as a stronger company," said Tom Falk, Kimberly-Clark Chairman and CEO, in a statement. "Through these changes we will be a more effective organization, with faster decision-making helping to drive efficiency throughout all aspects of our operations. In addition, by increasing our cash generation, we will be in a better position to take advantage of future growth and innovation opportunities."
Other consumer products companies are in a similar situation. Procter & Gamble Co. (PG), whose products include Tide detergent, recently announced plans to cut 300 jobs. Cereal giant Kellogg Co. (K) announced layoffs in March. Unilever Plc. (UL) said earlier this year that salaries would be frozen, including the CEOs.
More layoffs may come to the sector because consumers who have traded down to cheaper goods will be reluctant to trade back.