Kimberly-Clark to Lay Off 5,000, Shut Some U.S. Plants

Kimberly-Clark Corp., maker of Kleenex tissues, said Friday that it will lay off 5,000 employees, 7% of its work force, and cut back operations at 18 U.S. plants as part of a sweeping restructuring.

Kimberly-Clark, which also makes Huggies disposable diapers and an array of personal-care products, said it will close, sell or reduce operations at the plants and take a one-time charge in the fiscal fourth quarter of $590 million, or $1.06 a share, to pay for the restructuring.

The moves are expected to save $200 million annually by 2000, as the company seeks ways to meet its goal of doubling earnings per share from operations to $3.86 by 2000. The Irving, Texas-based company missed earnings forecasts in the past as product prices fell because of overcapacity at its plants and tough competition from Procter & Gamble Co. and others.

“This helps reassure investors that they can at least make consensus estimates for next year,” said Schroder & Co. analyst Andrew McQuilling.

About 60% of the cost-cutting will be in North America, and 70% of the charge will be related to restructuring its tissue operations.

Analysts had expected Kimberly-Clark to earn 64 cents in the fourth quarter. Its stock closed at $53.75, up $1.88, on the New York Stock Exchange. The company announced the restructuring after the close of trading.

The restructuring plan calls for consolidation of manufacturing operations into fewer, larger, more productive facilities. The plan will eliminate excess production capacity, including more than 200,000 metric tons of high-cost tissue manufacturing capacity.

“By consolidating facilities, we will eliminate excess high-cost production capacity and narrow our focus to advantaged technologies,” Chairman Wayne Sanders said.

Separately Friday, Reynolds Metals Co. said it will lay off 400 workers, or 21% of its work force, at its Alabama aluminum rolling mill and close a recycling plant.