WASHINGTON (dpa-AFX) - Coty Inc. (COTY) said that it plans to close its manufacturing site in Cologne, Germany. The move comes as the company consolidates global fragrance operations in order to increase the efficiency of the company's operations.
The company noted that its network has been operating over-capacity in recent years and the considerable impact of COVID-19 has accelerated the need to take action.
The Cologne site currently employs about 300 people and produces a range of fragrance products. The closure, which will occur in stages, will be preceded by the completion of all appropriate legal processes and is expected to be completed by Summer 2022.
Coty said it will adapt its other fragrance manufacturing sites as part of its evolving operational approach. In addition to addressing overcapacity, the changes are expected to deliver annual net savings for the company.
Last year, Coty announced a strategy to return the company to profitable growth, reduce net debt, streamline operations and address long-term financial challenges. The approach includes targeting a net reduction in costs of $600 million by the end of fiscal year 2023 and delivering more cost-effective and integrated operations. Supply chain optimization across manufacturing, distribution and demand planning were expected to contribute over 20% of the targeted $600 million cost savings.
Coty reported strong progress towards the cost reduction targets during its first-quarter earnings: delivering approximately $80 million of savings in the first quarter against a target of over $200 million by end of fiscal year 2021.
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