Company News
Kimberly-Clark announces its exit from the Nigerian market, stopping local diaper production
2024-06-01 16:00:40
Based on reports from Nigerian media, the American multinational corporation Kimberly-Clark has officially announced its exit from the Nigerian market due to the current economic situation in the country. The company will soon close its production facility in the Ikorodu area, despite having invested $100 million two years ago. The company continues to face economic challenges.
Kimberly-Clark announced last Friday in a statement that it has decided to cease production in Nigeria. The statement read: "Kimberly-Clark today announces that, due to recently refocused company strategic priorities globally as well as economic developments in the country, the company has made the difficult decision to exit its business in Nigeria after nearly 15 years of operations."
The manufacturer of Huggies diapers and Kotex feminine care products started production in Nigeria in 2012 but paused in 2019 due to unfavorable conditions. In 2022, Kimberly-Clark opened a factory in the Ikorodu area of Lagos, investing over $100 million.
According to an anonymous source, the company has struggled with high energy costs, raw material expenses, and decreased customer demand due to the current economic climate since the end of 2022. This has led to scaled-down operations, reducing production days from daily to Monday through Thursday.
Besides maintenance costs, the company spends about 100 million Naira monthly on power generation, with fixed operating expenses exceeding 500 million Naira per month.
The source noted, "In terms of sales growth and market share in the diaper industry, our first two years were very successful. Fast forward to late 2022 and 2023, these past two years have been really tough due to the economic situation."
"Running costs are very high. Our fixed expenses are over 500 million Naira monthly, and apart from maintenance, we spend about 100 million Naira on natural gas for powering gas engines. Last year, the company had two sets of equipment that did not run for 90 days within the 365 days."
Earlier this year, the company had to reduce shifts from four to two. Previously, operations were 24/7 all year round, but due to the economic situation, they no longer operate on Fridays, Saturdays, and Sundays. External hiring has been halted. Since the company is not profitable, it is looking for ways to cut costs.
Additionally, the source highlighted that, due to the import-based nature of raw materials, increased costs have led to higher production expenses.
It is noteworthy that Kimberly-Clark's exit is not an isolated case. In the past three years, at least 15 multinational companies have announced their exit from Nigeria. Last year, Procter & Gamble (P&G) similarly shut down production in Nigeria, having invested about $300 million in a facility in Ibadan, which was the largest non-oil investment by an American company in Nigeria.