Philip Morris to end cigarette production in Berlin, take $355M charge
Philip Morris International announced that, as part of its global manufacturing infrastructure optimization, its German affiliate, Philip Morris Manufacturing GmbH reached an agreement with employee representatives to end cigarette production in its factory in Berlin, Germany, by January 1, 2020. In connection with the agreement, Philip Morris expects to record estimated pre-tax charges of approximately $355M. The company expects that most of the pre-tax charges will be recorded in Q4 of 2019 and most of the cash expenditures will occur in 2020. The Berlin factory has a projected 2019 production capacity of approximately 40B units. Approximately 950 employees are impacted under the agreement. Philip Morris Manufacturing GmbH will continue the production of expanded tobacco in Berlin.Cost savings anticipated from the initiative are included in Philip Morris' previously communicated annualized cost efficiencies target of over $1B for the period 2019-2021.