Russia
Japan Tobacco Inc. (JT) recently announced that the company had decided to close its Moscow factory by mid-2016 due to the serious contraction of the tobacco market in Russia. This measure will be taken in order to optimize the manufacturing structure for greater efficiency in Russia, responding to a changing operating environment.
The operating environment has changed dramatically in Russia, with significant declines in tobacco demand driven by tax increases, tighter regulations and a challenging economic situation. The company came to this conclusion following a thorough analysis of the situation and of all available options.
The Moscow facility will cease to operate by mid-2016, with production moving to the company’s St. Petersburg factory. This move will affect 573 jobs. Impacted employees will be offered generous compensation, significantly above the labor legislation requirements in Russia.
JT is still committed to maintaining a strong market presence in Russia and will continue to invest for sustainable business growth in the mid to long-term.
This measure is expected to have very minor effect on the group’s consolidated performance for the fiscal year 2015.