Martina Lacey, London
In its third quarter 2012 results, Kimberly Clark stated that it was exiting the diaper category in Western and Central Europe, with the exception of the Italian market, and divesting or exiting some lower-margin businesses in certain markets, mostly in the consumer tissue segment.
The restructuring costs are expected to cost the company $300m to $400m pre-tax and result in it reducing its workforce by up to 1,500 as it streamlines its European manufacturing footprint and administrative organisation. In an effort to improve overall profitability, five manufacturing facilities will be sold or closed and some production will be transferred to other facilities.
Ogilvy & Mather currently handles creative duties for the brand, while Mindshare is responsible for the media account.
"The strategic changes we will be making in Europe should allow us to better focus on our best market positions and growth opportunities, improve our underlying profitability and enable more sustainable returns going forward in this part of the world, ” said Kimberly Clark chairman and chief executive Thomas J. Falk.
According to Euromonitor International, Proctor & Gamble’s Pampers diaper brand has a 44% market share in Europe, and despite 20 years of trying Huggies has failed to make a significant impact with consumers. In an interview with the Wall Street Journal, Falk conceded that “it’s been hard to get the attention of the consumers in that environment.”
In addition to the diaper category, Kimberly Clark will also be selling or exiting other low-margin businesses in Western and Central Europe, including paper towels, toilet tissues and facial tissues. Instead efforts will be focused on the more robust markets of China, Brazil, Russia and Eastern Europe.
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