Kimberly-Clark Corporation, the manufacturer of Huggies, Kotex and a collection of other consumer care products, has said that the Company will close its factory in Lagos in the second quarter of 2019 and build a new factory with an advanced technology in its place.
The company which earlier disclosed its plan to shut down 10 of its 91 production factories worldwide, in a statement on Wednesday said the increased demand on its products had necessitated the decision to advance their technological capacity, close down its factory in Lagos in the second quarter of 2019 and build a new one in its place.
“Kimberly-Clark can confirm that it will be closing its current factory in Lagos, Nigeria, in the second quarter of 2019, while it is in the process of building a new factory.
According to the company, the decision was made following a strategic review of its business model with the objective of increasing presence and further investments in Nigeria in the near future.
“Kimberly-Clark remains fully committed to the Nigerian market, where it will expand its commercial team and open an additional office in Lagos in 2019.” the company said.
The American multinational personal care company, regret the impact the closure might have on some of its staff and affirmed its responsibility towards its workforce.
“Regrettably, the decision means that for now, some 60 permanent employees have been made redundant.
“It is a responsibility we take very seriously and we are working to ensure our employees are supported as much as possible during this difficult time,” the personal care company added.
The Chief Executive Officer and Chairman of the Board of Directors, Kimberly Clark Corporation, Thomas Falk in a prepared remark on January stated that the company was positioning itself for profitability.
“The changes we are making will improve our underlying profitability, provide more flexibility to invest in growth opportunities and help us compete even more effectively,” he said.
Diaper market in Nigeria
The Nigerian diaper market has over 15 brands, with each jostling for market share across the country. While some have emerged top-of-mind brands with a national spread, some are confined to regional play. The stiff competition has also forced some to shut down parts of their operations and re-strategize.
Last year, Nigerians woke up to the news that P&G, makers of Pampers had decided to shut down its plant in Agbara, Ogun-State. While many attributed the closure to the inability of the company to cope with the growing competition in the market, management of the company said that it was part of its restructuring exercise in its Nigerian operations. An assurance was given that it would continue to operate in the country, albeit from its Ibadan plant only.
It would be recalled that in January 2018, Kimberly-Clark initiated the 2018 Global Restructuring Program aimed at reducing the company’s structural cost base and enhance the company’s flexibility to invest in its brands, growth initiatives and capabilities critical to delivering future growth.
The company expects the program to generate annual pre-tax cost savings of $500 to $550 million by the end of 2021, driven by workforce reductions along with manufacturing supply chain efficiencies.
As part of the program, Kimberly-Clark says it expects to exit or divest some low-margin businesses that generate approximately 1 percent of company net sales. The sales are concentrated in the consumer tissue business segment. To implement the program, the company expects to incur restructuring charges of $1,700 to $1,900 million pre-tax ($1,350 to $1,500 million after tax) by the end of 2020.
Fourth quarter 2018 restructuring charges were $180 million pre-tax ($134 million after tax), bringing cumulative charges to $1,036 million pre-tax ($783 million after tax). Fourth quarter 2018 restructuring savings were $55 million, bringing cumulative savings to $135 million.
Kimberly-Clark Corporation is an American multinational personal care corporation that produces mostly paper-based consumer products. Kimberly-Clark brand name products include and Huggies disposable diapers and baby wipes, Kleenex facial tissue, Kotex feminine hygiene products, Cottonelle, Scott and Andrex toilet paper, Wypall utility wipes, KimWipes scientific cleaning wipes.
OLUFIKAYO OWOEYE
