Tobacco giant Imperial Brands is planning to cease production at its German factory, putting hundreds of jobs at risk.
The Bristol-headquartered company said staff of the Langenhagen plant, which is operated by its German subsidiary Reemtsma, have been informed.
It is understood the company is now mulling options including a sale of the site to a third party or a closure. Some 640 employees are impacted by the decision.
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"The focus is on ensuring that the process is as transparent and fair as possible," Imperial Brands told investors on Wednesday (October 1).
The factory in Langenhagen began operations in 1971, producing classic factory-made cigarettes and fine-cut tobacco. It now also makes tobacco sticks for tobacco heaters.
According to Imperial Brands, the decision to stop production at the site at is the result of a "careful review" of the company's global manufacturing network and is in line with its strategy for 2026 to 2030.
The business said the decision was made amid "steadily declining" production volumes for traditional tobacco globally and "challenging" regulatory hurdles, and it had been left with "no alternative".
Business Live understands the Langenhagen plant was particularly affected by underuse and high production costs.
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Rémi Guillon, director of supply chain Europe at Imperial Brands and member of the Reemtsma executive board, said: "The announcement of our intention to cease production in Langenhagen is an unfortunate, but necessary, decision to ensure we can continue to invest in the long-term efficiency and effectiveness of our wider manufacturing network."
He added: "Despite the challenges, our colleagues here have always been highly committed and delivered excellent work.
“We recognise this decision creates anxiety for our colleagues and our priority is to provide the best possible support to all affected colleagues during this difficult time. The consultation phase with the works councils will begin immediately."
The announcement comes as Stefan Bomhard, who joined the firm in July 2020, prepares to step down as chief executive this month. He will continue to serve on the company's board until the end of 2025.