Scandinavian Tobacco Group (STG), the parent company of General Cigar Co. Cigars International and others, has announced that it is planning 100-120 layoffs of white-collar positions as part of a streamlining effort to increase profits.
The company has announced an innovative described as “Fueling the Growth” in an effort to increase shareholder value through efficiencies, greater market share and better earnings capabilities.
There are five key pillars of the program:
- organizational restructuring to ensure an agile organization
- realignment of commercial resources in four new divisions
- optimization of the global logistics set-up
- establishment of a global procurement organization
- improved operational cost efficiency through reduction of production complexity.
The company says it is expected to see the results of the changes by the end of 2021, though it will cost DKK 250 million ($38.5 million). Per STG, DKK 100 million ($15.4 million) will be spent in 2018 and the remaining DKK 150 million ($23.1 million).
Interestingly, it notes that the integration of Thompson Cigars—which STG purchased earlier this year—is not included in those estimates.
“The program we announce today is the natural next step in the development of Scandinavian Tobacco Group since 2015,” said Niels Frederiksen, ceo of STG, in a press release.
“When implemented, Fuelling the Growth will improve the execution of our strategic agenda and make us a stronger, more competitive company capable of coping with the changing market conditions and better equipped to become the best integrator in the industry. Unfortunately, we have to part ways with a number of valued colleagues as we ensure that we have the right organisation in place to support our long-term ambitions.”
STG—which is traded on the NASDAQ Copenhagen—closed down 2.3 percent today following the announcement.