Announcing its mid-yearly financial results yesterday, Farsons Group said it will lay off 60 employees within a year after its profit registered a drop by more than half over the same period in 2007.
After recording €3,312,000 on 31 July last year, Malta’s main brewery’s profits before tax this year slumped to €1,520,000. Farsons said its gross margins have been adversely affected by “the advent of illicitly imported beverages, which have not been subjected to eco-contribution, and, in some cases, VAT, thus placing the Group under significant unfair competitive disadvantage.”
Also, the brewery and beverage manufacturers have attributed the decline to initial setup problems after it commissioned new production lines. “These problems are being addressed,” the brewery said.
Otherwise, group turnover for the same period has increased by 4.6 per cent, to €35,306,000.
“While soft drink sales increased in volumes, sales values per litre decreased substantially,” a company statement read.
As beverage manufacturers in Malta are now operating in a fully liberalised market, and competition grew heavy for players in this industry, the beer and soft drink local giants have decided to downsize and employ a permanent cost-cutting programme, which also plans to lay off 60 employees within the next 12 months.
“The board of directors is determined and confident that it will achieve these targeted cost reductions, and that, as a result of these measures, the emerging cost structures will allow for improved profitability levels,” Farsons said.
When contacted for a reaction, General Workers’ Union Secretary-General Tony Zarb said the union is currently in the process of discussing the matter with Farsons to find a solution in the best interest of the workers.
