28th Jul 2006 12:15
Imperial Tobacco Group PLC28 July 2006 July 28, 2006 IMPERIAL TOBACCO GROUP ANNOUNCES RESTRUCTURING OF ITS EUROPEAN MANUFACTURINGOPERATIONS Imperial Tobacco Group today announced a restructuring of its Europeanmanufacturing operations which will result in the closure of factories inLiverpool, UK and Lahr, Germany. The closures will strengthen the Group's competitive position in a challengingenvironment by improving efficiencies, reducing overall costs and addressingover-capacity. The Liverpool factory predominantly packs Golden Virginia fine cut tobacco butalso produces a small amount of pipe and snuff tobacco. The Golden Virginia packing operations will be transferred to the Group'sfactories in Nottingham and Mullingar, Ireland. Contract manufacturingarrangements for the production of pipe and snuff tobacco are currently beingfinalised. A restructuring of the factory in Lahr had previously been announced in March2006 as a result of the November 2005 European Court of Justice (ECJ) ruling onthe taxation of Singles products. However, in June 2006 the German Ministry of Finance announced that it wouldapply the ECJ ruling to filterless eco cigarillos, which are currently taxed ascigars and are also manufactured in Lahr. Filterless eco cigarillos producedafter 31 July 2006 will be taxed as cigarettes and, like Singles, will no longerrepresent an attractive value offering to consumers. The Group will therefore cease production of these products after this date,which will further significantly impact volumes at Lahr. As a result, thefactory will become unsustainable and will therefore close. The remainingcigarillos production will be transferred within the Group's Germanmanufacturing operations. The closures are expected to be complete by March 2007 and will result in theloss of 415 jobs - all 140 jobs at the Liverpool factory and all 275 jobs at theLahr site - although there will be some redeployment opportunities within thewider Imperial Tobacco Group. Employees, the works council and trade unions were informed of the decisiontoday and the consultation process is now underway. The restructuring is expected to generate annual cost savings of around £7million from the 2007-08 financial year. It is anticipated that there will be arestructuring charge of £27 million in the current financial year, of which £7million will be non-cash items. These annual savings and costs are additional to those outlined in the Group'sLahr restructuring announcement of 30 March 2006. At that time the Groupannounced expected annual cost savings of around £4 million from the 2006-07financial year and a restructuring charge of around £18 million in the currentfinancial year, of which £8 million was non-cash items. David Cresswell, Imperial Tobacco Group Manufacturing Director, said: "Weoperate in a challenging environment and must ensure that we continue to reducecosts and improve productivity and operational efficiencies, in order to furtherstrengthen our competitive position. "However, our immediate focus will be on supporting our employees during thisdifficult time. Job losses are always regrettable and we will ensure that ourhighly skilled workforces in Liverpool and Lahr are treated in a fair andresponsible manner." There will be no impact on sales and marketing activities, or the quality andavailability of any Imperial Tobacco Group products as a result of the closures. Today's announcement follows several previous restructuring initiatives sincethe acquisition of Reemtsma in May 2002, including the closure of nine ImperialTobacco Group manufacturing sites. Following the closure of the Liverpool and Lahr factories, the Group's globalmanufacturing portfolio will consist of 29 factories. ENQUIRIES Alex Parsons Group Media Relations Manager Tel: +44 (0)117 933 7241 Simon Evans Group Media Relations Executive Tel: +44 (0)117 933 7375 John Nelson-Smith Investor Relations Manager Tel: +44 (0)117 933 7032 NOTES TO EDITORS Imperial Tobacco Group Imperial Tobacco Group is the world's fourth largest international tobaccocompany, manufacturing and selling a comprehensive range of cigarettes,tobaccos, rolling papers and cigars in more than 130 countries worldwide. TheGroup currently has 14,500 employees and 31 manufacturing sites. Liverpool Factory The Liverpool factory employs 140 people and packed around 2,400 tonnes ofGolden Virginia fine cut tobacco in the Group's last financial year. In the sameperiod it also manufactured 450 tonnes of pipe tobacco for the UK and variousexport markets, and 67 tonnes of snuff tobacco, mostly for export to West Africa. Lahr Factory The tobacco products factory in Lahr has 275 employees and produced around 7billion Singles and around 900 million eco cigarillos for the German market inthe Group's last financial year. Singles (also known as modern make your own tobacco products) refers topre-rolled cartridges of tobacco, which are not able to be smoked whenpurchased. The cartridges are inserted into cigarette paper tubes with filters,using a special device resembling a pen. The tobacco cartridges and the papertubes with filters are sold separately. Eco cigarillos are an American blend tobacco rolled in a brown tobacco paperinstead of a white cigarette paper. They are available with or without filter. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Imperial Brands