set plans to fire 10% of its staff over three years while closing, selling or "streamlining" 24 plants in an effort to boost competitiveness.
The Dallas-based maker of Kleenex and Huggies said there would be "a particular focus on Europe" aimed at reducing overhead and grasping growth opportunities. The company said the job cuts would affect 6,000 workers and that it aimed to save $300 million a year by 2009 and to reinvest the balance in high-margin investments. Kimberly-Clark said pretax charges from the plan will total $1 billion or so over three years and also said it would step up its stock buybacks, targeting $1.5 billion against the previous $1 billion plan.
The news of the plan came as the company posted second-quarter earnings that were in line with Wall Street's expectations and guided toward an in line 2005 performance.
For its second quarter ended June 30, Kimberly-Clark earned $422 million, or 88 cents a share, down from the year-ago continuing operations profit of $443 million, or 88 cents a share. Excluding the tax consequences of repatriating foreign earnings, latest-quarter earnings were 95 cents a share, a penny ahead of the Thomson First Call analyst estimate. Revenue rose 8% from a year ago to $3.98 billion, beating the $3.87 billion estimate.
"Our top- and bottom-line growth in 2005, coming on the heels of good results in 2004, affirms that the Global Business Plan we launched two years ago is succeeding," CEO Tom Falk said. "I'm proud of what our teams have accomplished. The actions we are announcing today underscore our commitment to the key elements of the Global Business Plan -- to instill financial discipline throughout the company, invest in businesses and opportunities with high-growth potential and support those businesses that already command strong positions in their markets. Going forward, we intend to meet or exceed our objectives while delivering improved returns to our shareholders."
The company also offered in line guidance for the third quarter and fiscal year, saying it expects to make 95 cents a share for the quarter and $3.80 for the year.
Early Friday, Kimberly-Clark was flat at $62.85.