MALAYSIA – Huhtamaki, a global sustainable packaging solutions provider, has announced the closure of its production facility in Port Klang, Malaysia, as part of its strategy to consolidate its production footprint.
This consolidation effort aims to combine production within the Fiber Foodservice Europe-Asia-Oceania segment and is scheduled for completion by the end of the second quarter (Q2) of 2024.
The company emphasizes that this strategic move will streamline its manufacturing footprint, enhance competitiveness, and lay a stronger foundation for future growth in the Asia Pacific region.
Despite the closure of the Port Klang facility, Huhtamaki remains committed to serving the region through its distribution centers in Malaysia and Thailand, along with a sales office in Singapore.
Regrettably, this decision will impact 93 employees. Huhtamaki has pledged to provide comprehensive support to these affected individuals during the transition.
This consolidation is part of Huhtamaki’s broader strategy to accelerate its operational efficiency, first announced in November 2023.
The company anticipates that these efficiency improvements will result in savings of approximately €100 million ($106 million) over the next three years.
Although the Port Klang site is not a significant contributor to Huhtamaki’s sales or profits, the company expects to incur closure-related costs of approximately €13m during Q1 and Q2 2024.
The company will record these costs as items affecting comparability.
This announcement comes on the heels of Huhtamaki’s previous declaration to consolidate its production within the same segment in China.
The company intends to consolidate its manufacturing activities by closing down its Tianjin and Shanghai sites by the end of the second quarter of 2024, with operations being transferred to the Guangzhou facility.
This restructuring will not affect production at the Xuzhou site. This decision, while affecting 154 employees, underscores Huhtamaki’s commitment to supporting its workforce in transitioning to new employment opportunities.
The move is a strategic maneuver aimed at optimizing the company’s manufacturing footprint and bolstering its competitiveness.
It aligns with Huhtamaki’s broader strategy acceleration program announced last November, which is anticipated to significantly enhance profitability.
The efficiency improvements targeted by this program are expected to yield approximately €100 million (US$109.28m) in savings over the next three years, according to the company.
The decision to close the Tianjin and Shanghai sites is grounded in their apparent lack of significant contribution to Huhtamaki’s sales or profits, as indicated in the FY23 report.
Despite a 7% decrease in net sales to €4.16 billion (US$4.49bn) from €4.47 billion (US$4.85bn) in FY22, the company remains resilient.
Comparable net sales growth at the group level decreased by 2%, with a steeper decline of 4% observed in emerging markets.
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