Not a barrel of laughs

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Seguin Moreau, the cooperage business which belongs to French
closures company Oeneo (formerly known as Sabaté Diosos), has
unveiled a major new strategy to help it cope with the changing
demands of the modern business climate.

The company said that the currently unfavourable economic and wine-making climate, marked by an increasing tendency amongst operators to defer investments in barrels, combined with the second consecutive year of poor harvest returns on several of the company's principal markets, meant that a restructuring of the business was inevitable.

Up to 30 jobs could go at Seguin Moreau production units in Pouilly-sur-Loire and Merpins as a result.

The company said that the restructuring was likely to cost around €2 million, which would be charged to its second half accounts. But the measures are also expected to generate annual savings of €1.3 million as 2004.

The overhaul at Seguin Moreau is part of a wider restructuring at Oeneo as a whole, designed to cut costs and restore profitability. Oeneo, the world's biggest barrel maker and the number two producer of wine closures, saw its business decline in fiscal 2002 as a result of the sluggish global economy taking its toll on wine sales. Total group turnover dropped €30 million to €201.7 million, while operating profits were down €14.5 million to €11.1 million.

Turnover from the closure division was €15.5 million down on 2001 at €94.5 million, while operating losses were €5.6 million, a decline of €3.3 million. Earlier action to cut costs helped limit the negative impact, and the hope is that the restructuring at the barrel division will have a similar effect on 2003 figures - and help generate a return to the black in 2004.

Sales at the barrel division were €14.0 million lower in 2002 at €99.6 million, while operating profits also declined, sliding €11.7 million to €17.9 million.

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