British American Tobacco Regulatory News (BATS)

13 Jul 2005 13:48

British American Tobacco PLC13 July 2005 UK and Ireland announce factory closure proposals British American Tobacco said today that its operating companies in the UK andIreland have announced that they are to initiate consultations on proposals tocease manufacture and transfer production elsewhere. In the UK, it is proposed that the Southampton factory will close within 18-24months. Subject to consultations, this will result in the loss of some 530 jobs,primarily in manufacturing. About 450 jobs would remain on the Southampton site, within Group R&D, BritishAmerican Shared Services (BASS), and the UK supply chain. The company's tobaccoprocessing plant in Corby, Northamptonshire, is not affected. In Ireland, P J Carroll & Co Ltd. is to consult on a proposal to stopmanufacturing at its cigarette factory in Dundalk, Co. Louth, employing 66people. Today's announcements come as a result of separate reviews into the prospectsfor both factories. Regrettably, both reviews have concluded, subject toconsultations, that there is no viable future for either. The Southampton operation, which manufactures primarily for export, announcedlast month that 25% of its production would be localised to factories inSingapore and Korea. The Dundalk factory manufactures largely for the Irish market and is currentlyoperating at only 45% of its capacity. Industry volumes in Ireland have beenadversely affected by increases in excise tax on cigarettes as well as thepublic places smoking ban. Allan Short, Head of UK&I Operations, which manages both facilities said: "Thisis a very difficult time for all of us. We intend to start consultationsimmediately, and we are committed to doing all we can to mitigate the impacts ofany job losses. "Regrettably higher costs in western Europe and the increasing trend towardslocal production have combined to turn the tide against our manufacturingoperations in the UK and Ireland." Today's proposals would create combined restructuring charges of approximately£160 million, the majority of which, it is anticipated, would be charged in2005. Annual savings, once full benefits have been realised, would beapproximately £40 million. ENQUIRIES British American Tobacco Press Office Investor RelationsDavid Betteridge/Teresa La Thangue/Emily Brand Ralph Edmondson/Rachael Cummins44 (0) 207 845 2888 (24 hours) 44 (0) 207 845 1180 or 1519 Note to editors: • British American Tobacco, the world's second largest publicly quoted tobacco group, does business in 180 markets. Its portfolio of more than 300 brands include leading international brands such as Lucky Strike, Kent, Dunhill and Pall Mall. • The Group has 81 cigarette factories in 64 countries, producing some853 billion cigarettes in 2004 (including the make-your-own cigarette 'stix').The Group also has 9 Other Tobacco Products (OTPs) factories in 7 countrieswhich manufacture cigars, roll-your-own and pipe tobacco. Our companies,including associated companies, employ more than 90,000 people worldwide. Southampton: • UK & Ireland Operations, based in Southampton, manufactures and supplies cigarettes for the home and export markets. About 90% of all production in the Southampton factory is for export, mostly to countries outside the EU. Key brands include Lucky Strike, State Express 555, Dunhill and Rothmans. • British American Tobacco directly employs about 1,000 people at its Southampton site, including 652 people within UK operations. This comprises some 530 in manufacturing, 80 in supply chain and 40 in support services. Also on site, the Group R&D centre and the BASS organisation - which are not part of the UK Operations - employ some 220 and 120 people respectively. • The factory has a fully installed capacity of up to 50 billion cigarettes per year. Current volume is approximately 24 billion. Future volume (following localisation of some production to the Far East, and implementation of the EU export ban) would be below 14.5 billion. • British American Shared Services (BASS) - based in Southampton and Brussels - provides finance transactional services (e.g. invoice processing and general accounting) to markets in Western Europe. The Southampton branch deals with transaction processing. Dundalk: • PJ Carroll & Co Ltd. became part of British American Tobacco following the 1999 merger with Rothmans International. • Its cigarette manufacturing facility in Dundalk, Co Louth, Ireland, ismanaged by UK&I Operations. Key brands include Carroll's No 1, Major and SweetAfton. It currently makes about 0.8billion cigarettes per year. This information is provided by RNS The company news service from the London Stock Exchange