Amcor Ltd. has announced a major restructuring of its European flexibles business with the closure of two plants and a shakeup of its organization.
Amcor, which runs flexibles plants in 15 European countries, so far has not identified the facilities that will close in the next year, but said the targeted plants will be units serving the processed food sector in Western Europe. More details will be given once employee negotiations have begun, it said.
In addition, Melbourne, Australia-based Amcor plans to expand its flexibles and tobacco packaging operations in Eastern Europe to capitalize on rapid growth there. The company will invest in new printing presses in its tobacco carton and flexibles plants in Poland and Russia.
Restructuring will simplify the European flexibles business, which currently comprises five operating divisions, including tobacco carton packaging and closures units and a corporate office in Gloucester, England.
The streamlined structure will consist of three separate new divisions with no European head office. The new segments will include Amcor Flexibles Food, covering processed and fresh food packaging plants in Western Europe, headed by the current fresh food business Managing Director Gerard Blatrix.
Amcor Flexibles Healthcare, headed by the present president of Flexibles Americas, Peter Brues, will incorporate health-care packaging plants on either side of the Atlantic. It will coordinate strategy and commercial activity with Amcor's flexibles health-care operations in Asia, according to the group.
The third segment, Amcor Rentsch, will look after the Eastern European flexibles operations as well as the group's global tobacco packaging business. That segment will be led by Jerzy Czubak.
Amcor expects the flexibles shakeup to achieve annual savings of around A$11 million (US$8.15 million), said Ken MacKenzie, the group's chief executive officer and managing director, who announced the changes to coincide with Amcor's results for the second half of 2005.
As for the plant closings, Amcor expects to have annual savings by 2007-08 of around 10 million euros (US$11.8 million). Eliminating the two units is expected to cost about 32 million euros (US$38 million) in cash and 18 million euros (US$21 million) in mainly asset write-downs, the group said.
Currently, the group has European flexibles operations in Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. It also just commissioned a new flexibles plant in Novgorod, Russia.
Amcor reported its flexibles division saw its half-year profit fall 6.2 percent at just short of 60 million euros (US$73 million) against the same period last year. Sales were up 3 percent. The business was hit by higher-than-expected costs for raw material, energy and transportation, and faced a challenge to pass on such rises.
Amcor Flexibles operates 46 plants throughout the world, supplying products to the food, beverage and health-care markets.