Imperial Tobacco to move some production from Germany to Poland

Imperial Tobacco Group PLC plans to transfer production of 10 bln cigarettes from Germany to Poland as part of the ongoing restructuring of its manufacturing operations.

The move will generate annual cost savings of around 10 mln stg from 2007, and will cost 30 mln. Around 200 jobs will be cut in Berlin.

Tobacco companies are increasingly shifting production to countries were demand is growing, as consumption wanes in western countries. Cigarettes can also be produced more cheaply in less developed regions.

Imperial Tobacco has closed eight manufacturing sites since 2002.

Production will be reduced at a factory in Berlin, which will continue to manufacture cigarettes for the German market. The group's larger manufacturing site in Langenhagen, near Hannover, will become its main factory in Germany.

The German market has proved particularly difficult for tobacco companies in the last few years, where successive tax increases have led to a significant decline in demand.

Imperial said the restructuring will improve its competitive position in the country, which counts for around a fifth of the company's sales and profits.

Relocating production for cigarettes destined for Central and Eastern European markets to Poland will allow for further cost savings, the company said.

'Our continued focus on achieving the lowest overall manufacturing cost will ensure that we continue to strengthen our competitive position in a challenging environment,' manufacturing director David Cresswell said in a statement.

(Source: Forbes/AFX)

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