Kimberly-Clark to Drop Non-Consumer Lines

Continuing a restructuring trend in the paper industry, Kimberly-Clark Corp. is planning to sharpen its emphasis on consumer and health care products by shedding its tiny interests in business paper and pulp production. Directors of the Dallas-based firm gave management the go-ahead to weigh a spin-off a Canadian pulp mill and timberlands and two producers of writing and coated papers with annual sales of $650 million, or less than 3% of corporate-wide volume. Given the units’ microscopic position inside Kimberly-Clark, some observers think a spin-off is overkill but point out that the company could be advertising them for sale. “Once you’ve announced a disposition, you’ve put them in play,” one expert commented. Although the company said the businesses are slower growing and lower margined than core operations and that removal of the pulp mill would enhanced operational flexibility, the move is part of a broader strategic repositioning in the paper field. Gib Carey, a consumer products expert at Bain & Co., says that studies have found that companies in all industries perform best when they concentrate on a single core business and are not distracted by periphery units. Kimberly-Clark’s primary challenge, he notes, is to “build value” for consumers, while the pulp and non-consumer businesses depend on cost cutting and efficiencies from scale. “It is very difficult for a corporation to be excellent in different things,” he says. “The company has to decide on what its true core is and where it wants to participate.” Among other restructuring-minded paper companies are Georgia-Pacific Corp., which tried an IPO for its consumer products, while both GP and International Paper Co. turned their timberlands into trusts. Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com