STG Closes Lane Facility

Scandinavian Tobacco Group is closing its Lane facility in Tucker, Georgia, USA, and moving production to facilities in Denmark and the Dominican Republic. The closure will reduce the group’s number of production facilities to 11 from 12.

The Tucker facility manufactures pipe tobacco, fine-cut tobacco and little cigars, the markets of which have been declining.

The closure of the Tucker facility will adjust the capacity to current and projected volumes and is expected to improve the group’s overall annual cost structure by more than DKK20 million ($2.99 million) when fully implemented by the end of 2020. The transfer of production is expected to incur investments of about DKK30 million.

In a statement, the company said the closure would not impact its 2019 financial guidance, except for special items. Special costs related to the closure are expected of about DKK120 million and will be expensed in 2019.