Scandinavian Tobacco Group has announced that it is reducing the number of its production sites and as a result will be closing the Scandinavian Tobacco Group Lane Ltd.’s facility in Tucker, Georgia. This will bring the number of its production sites down to 11. The closure of the Tucker, Georgia facility is expected to be completed by the end of 2020.
Scandinavian Tobacco Group Lane Ltd.’s Tucker, Georgia facility manufactures brands within the Group’s portfolio of pipe tobacco, fine-cut tobacco and little cigars. With these markets being in decline, the company believes closing the Tucker facility will help the company adjust the capacity to current and projected volumes and could improve the Group’s overall annual cost structure by more than DKK 20 million (USD $2,978,952) when the closure is fully completed by the end of 2020. Production will be transferred to the company’s facilities in Assens and Holstebro, Denmark and Santiago, Dominican Republic. The transfer of production is expected to incur investments of about DKK 30 million (USD $4,468,391).
The closure of the Tucker production facility is expected to result in positions being terminated at Scandinavian Tobacco Group Lane Ltd. According to the company, the affected employees will be offered outplacement support.
The announcement has no impact on Scandinavian Tobacco Group’s financial guidance for 2019, except for special items. Special costs related to the closure will be expensed in 2019 and the group’s special costs–excluding the costs related to the acquisition of Royal Agio Cigars [read more here]–are now expected to be about DKK 205 million in 2019, up from the previous amount of DKK 85 million. Possible proceeds from the sale of the land and buildings have not yet been included in the company’s figures.
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