Vimto production to be outsourced

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UK soft drink company Nichols is to outsource production of its
core Vimto and Sunkist brands in order to cut costs.

Nichols, the UK soft drink company which produces the Vimto brand, has announced a number of organisational changes as a result of a strategic review of its business. The changes are designed to improve operating efficiencies and reduce the company's cost base.

Stockpack, the contract packing operation currently based in Stockport, will be relocated to another production facility, that of Nichols Foods (a manufacturer and supplier to the vending, foodservice and retail market) at Haydock, with the subsequent closure of the Stockport site and the loss of 130 jobs, the company said.

Meanwhile, the production of Nichol's soft drink brands, including Vimto, Indigo and Sunkist, is to be outsourced, resulting in the closure of the Golborne factory with the loss of around 60 jobs.

Nichols will continue to retain direct control of the sales and distribution activities relating to all of its soft drinks brands.

The estimated total cost of this restructuring will be around £10 million (€14.6 m), of which approximately £6 million relates to fixed asset write-downs and the remainder comprising mainly of redundancy and relocation costs.

Nichols stressed that these figures did not take into account any proceeds arising from the disposal of the freehold properties at Stockport and Golborne which it expects will net around £8 million. Excluding property disposals, the annual benefit to the group of the measures being undertaken is estimated to be in excess of £2 million at the operating profit level.

The company also said that its 2002 results would be in line with market expectations - pre-tax profit of around £5.6 million - when they are released later this month.

John Nichols, chairman of the company, said: "Our strategic review has been thorough and although we regret the reduction in headcount we are confident the planned changes are absolutely the right ones for the business going forward. Having made them we will be well positioned to face the increasingly competitive market conditions and to grow future profits."

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