According to insiders familiar with the matter, the plant’s production has been decreasing since late 2023 and has persisted into 2024. This decline is mainly attributed to the difficult economic circumstances facing the country, Nairametrics reported.
Kimberly-Clark commenced operations in Nigeria in 2012 but ceased activities after five years in 2019 due to unfavourable economic conditions. However, it resumed operations in 2021.
The company produces Huggies diapers, sanitary pads, Kotex and other hygiene and personal care products. KC is a listed multinational on the New York Stock Exchange with the majority of its shares held by institutional investors like Blackrock Inc., Vanguard Group, Morgan Stanley etc.
Since late 2022, the company has faced numerous hurdles, including soaring energy expenses, scarcity of raw materials, and dwindling customer demand amidst the current economic climate, according to an anonymous insider.
What he said:
“Our first two years were fantastic in terms of sales growth and market shares within the diaper industry. Fast forward to late 2022 and 2023 were really bad years for the coy due to the economic situation,”
“Earlier this year, the coy had to downsize to 2 shifts from 4 shifts. We run 24 hours 7 days and 365 days before but currently, we don’t run on Friday, Saturday, and Sunday anymore because of the economic situation. There is already an embargo on external recruitment. The company is looking for ways to reduce cost since it is not making a profit,” he said.
Currently, the company’s monthly spending on power generation alone stands at around N100 million, exclusive of maintenance expenses. Furthermore, its monthly fixed operational costs have escalated to over N500 million.
The source added that the heightened production costs stem mainly from the increased prices of raw materials, predominantly because the company relies on imports for these resources.
The Nigerian economy is facing one of its most challenging years in a decade, with both small enterprises and large corporations feeling the impact of an economic downturn.
Last year saw several companies, such as Procter & Gamble (P&G), GlaxoSmithKline, and Equinor, withdraw from the country. Kimberly-Clark’s planned exit adds to these concerns, particularly due to the negative message it sends to investors.
