Productivity enhancement
In parallel with the focus on organic growth and acquisitions, efforts are pursued consistently to attain a more market-oriented organization and a more efficient production structure.
The focus in recent years on significant structural and rationalization programs has led to sizeable improvements in consolidated operating profit and operating margin.
In cigars, Swedish Match has effected successful rationalization and restructuring programs. Among other developments, output in Indonesia has been expanded and additional measures were taken to raise productivity in Belgium, as well as in Alabama, USA. These changes led to higher earnings and improved resource management.
The Lights product area has also seen the completion of wide-ranging restructuring programs in recent years aimed at boosting earnings. Operations lacking clearly identifiable synergies with other businesses have been divested, as have activities which provided low earnings. In addition, rationalization programs at match plants have been completed. As a result, Group earnings have improved substantially, with operating margins rising from 5 percent in 2003 to more than 17 percent in 2007.