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RUSSIA: Rexam cuts capacity on lower drinks demand

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Falling demand for drinks in Russia has forced Rexam to announce that it will cut beverage can production in the country.

Rexam said today (03 August) that it will cut annual drinks can capacity by 1.3bn in Russia, by ceasing to make cans and can ends at the Dmitrov plant near Moscow.

The move is a result of "weakness in the Russian beverage can market", said Rexam, which last week reported net losses of GBP15m (US$24.5m) for the six months to 30 June, compared to profits of GBP97m in the same period of 2008.

Rexam acquired the Dmitrov factory following its buyout of Rostar in Russia for US$297m last year.

Cutting production at the plant will save GBP6m annually from 2010, forming part of Rexam's plan to save GBP20m annually by reducing can capacity across Europe from next year.

Rexam CEO Leslie Van de Walle said: "Despite poor volumes in Russia, the Rostar acquisition is delivering good returns on our investment, and long-term growth prospects remain very attractive."

The Dmitrov can end line will be relocated within Russia, while the can line will be eventually redeployed as market conditions improve, the UK-based group added.


Sectors: Beer & cider, Soft drinks

Companies: Rexam

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