Peter Harrisson, chief executive, said that previously strong demand from China, where Molins supplies rolling machines to the huge state tobacco industry, had showed no sign of resuming and orders previously in the bag continued to be delayed. As a result the company is cutting a quarter of its 2,000 workforce in tobacco machinery over the next three months, most in the UK from its High Wycombe factory.
The news is the latest in a horrendous year for the company. In July Molins was forced to reveal that accounting irregularities at its US corrugated packaging business were larger than expected and in September it was forced to retract a July statement that the future of its tobacco machinery business was "encouraging." Asked whether shareholders were putting pressure on management, Mr Harrisson said: "No one had been bold enough to ask about my position."
He said the restructuring, which involves asset writedowns, would cost pounds 16m in the second half on top of pounds 1.5m restructuring charge in the first half and pounds 13m provision to cover the accounting irregularities. As a result, he said, profits for the second half of the year would be lower than the first half.
Mr Harrisson who has threatened to sue KPMG, its former auditors, over the irregularities which took place over 10 years said Molins was still in talks with KPMG.
- Sameena Ahmad
Investment column, page 24Reuse content