Philip Morris International will shut down its manufacturing facility in Bergen op Zoom, the Netherlands, in response do declining demand for cigarettes in Europe.
The closure of the plant in Bergen op Zoom, PMI’s largest production facility worldwide, would result in 1,230 job losses, about 90 percent of its total workforce there. Production will shift to other factories in Europe with spare capacity, it said.
PMI’s said sales volumes have plummeted 20 percent in the past four years and that a recovery is “highly unlikely.”
The company also blamed a new EU tobacco-control law that will ban flavored cigarettes and require bigger warning labels on packets.
Earlier, Philip Morris said it would stop making cigarettes in Australia by year-end, resulting in the loss of 180 jobs as the company shifts production to South Korea.
Philip Morris USA will launch an e-cigarette under the MarkTen brand in Indiana in August, reports The Wall Street Journal.
MarkTen is a disposable e-cigarette but can be reused by buying a separate battery recharging kit and additional cartridges. Made in China by a contact manufacturer, the e-cigarette is expected to sell for about $9.50.
PM USA is the last of the major U.S. tobacco companies to introduce an e-cigarette in an industry-wide effort to diversify beyond the traditional cigarette business, which has become more challenging in the face of tax increases, smoking bans, health concerns and social stigma.
Last week, R.J. Reynolds Vapor Co., a subsidiary of Reynolds American, announced it would start selling its Vuse e-cigarette to retail outlets throughout Colorado in June.
Vuse was developed in-house by R.J. Reynolds R&D experts, and will be manufactured in the United States.
In April 2010, Lorillard acquired e-cigarette maker Blue Ecigs. It has expanded into more than 80,000 retail outlets.
Analysts estimate sales of e-cigarettes could double this year to $1 billion. Some have even said consumption of e-cigarettes could surpass consumption of traditional cigarette within the next decade. The Food and Drug Administration plans to assert regulatory authority over e-cigarettes in the near future.
Electronic cigarette maker Njoy said Monday it had raised $75 million in financing from investors including Napster founder and ex-Facebook president Sean Parker.
Philip Morris International is due to host a live audio webcast at www.pmi.com/webcasts of its remarks and question-and-answer session by CFO Jacek Olczak at the Goldman Sachs Consumer Products Symposium on May 14, starting about 9:05 a.m. Eastern Time.
The webcast, which will be in listen-only mode, will provide live audio of the entire PMI session.
An archived copy of the webcast will be available at www.pmi.com/webcasts until 5 p.m. on June 12.
Remarks and slides will be available at www.pmi.com/presentations.
Cigarette maker Philip Morris Fortune Tobacco Corp. will have a new president starting May 1, taking the reins from Chris Nelson who is retiring effective on the same date.
In an emailed statement, the company said Nelson will be succeeded by Paul Riley, another company veteran, as PMFTC president.
“Chris has long expressed his desire to retire after 10 years in the Philippines with PMPMI (Philip Morris Philippines Manufacturing) and PMFTC and more than 27 years in Philip Morris International,” the PMFTC statement read.
Nelson is a 32-year veteran in the tobacco industry. He will be retiring in the Philippines.
Riley joined Philip Morris in Australia in 1988 and “assumed roles of increasing responsibility” in Hong Kong, Thailand, Japan and recently as managing director of the PMI affiliate in the Republic of Serbia, Montenegro and Central Europe South.
Thousands of jobs could be lost if plain packaging for cigarettes and tobacco products is introduced, according to a story in the South Wales Evening Post, citing a report released and commissioned by Philip Morris Ltd.
The report suggests up to 30,000 of the 182,300 jobs in Britain’s small, independent retailers are at risk and concludes tobacco purchases will migrate to illegal street vendors, larger stores and purchases from abroad.
Douglas McWilliams, co-author of the report, said, “Convenience stores depend heavily on tobacco sales and the associated spending by those who drop in to buy cigarettes.
“All the survey evidence and simulation exercises available suggest that plain packaging would cause spending to move to illegal street vendors, larger stores and purchases from abroad. If this is replicated in real life, high streets up and down the country would be dealt a body blow.”
André Calantzopoulos has been appointed CEO of Philip Morris International. Calantzopoulos has served as PMI’s chief operating officer since the company’s spin-off in March 2008. Louis Camilleri, PMI’s previous CEO, will remain as chairman of the board and as an employee of the company.
Since the spin-off, Camilleri and Calantzopoulos have worked closely together in their respective roles as CEO and CEO. Under their combined leadership, PMI has solidified its position as the largest and most profitable international tobacco company, while expanding its global market share, excluding China and the United States, to a record 28.8 percent in 2012.
“After eleven years of leading PMI and its former parent, and with the company squarely poised for future success, I decided that the time has come for me to relinquish my executive role,” said Camilleri. “I am delighted to hand over the management responsibility of the company to André. He is well equipped, and the company is well positioned, to continue to deliver superior shareholder value.”
“I am deeply honored that Louis and the board have the confidence in me to continue to build on PMI’s tremendous success,” said Calantzopoulos. “I am particularly grateful to Louis for his mentorship over a long period of time, during which I have always been deeply impressed with his passion for the company, his critical and insightful analysis and vision, his regard for each PMI employee, and his devotion to the integrity and transparency of communications to investors and to enhancing shareholder value. He has set the standard by which all future leaders of PMI will be judged.”
As chairman of the board, Camilleri will assist the CEO in long-term strategy, serve as the CEO’s sounding board and continue to fulfill the duties of chairman of the board of directors. Calantzopoulos will have the management responsibility for the company and will report to the full board of directors.