It appear that Altria (MO) is taking another step to it’s eventual spin of Phillip Morris International (PMI). Today they announced a consolidation of operations that will result in a North Carolina manufacturing plant being closed by 2010. The Cabarrus, North Carolina plant employs 2,500 workers will be closed and manufacturing will be consolidated at its Richmond, Virginia plant. The production for PMI that currently is done in Cabarrus will be moved to Europe, eliminating shipping/freight costs for PMI. Most hourly workers in Carrabus will be offered work at the Richmond facility.
The company expects total savings by 2011 to be $335 million per year. Of the savings, $179 million will go to Philip Morris International and $156 million will go to Philip Morris USA. 2007 charges will be $325 million, or $0.10 off of EPS, mostly taken in Q2 and $50 million will come later in 2007.
This is another step for Altria’s Phillip Morris USA (PMUSA) to separate from the International operations (PMI). With this move PMI will now have it’s own production facilities and be wholly functionally independent from PMUSA. It is starting to look like we may get an announcement of the intentions here at the next board meeting (along with a nice fat dividend increase)in Q3.