In mid-2003, the Group began to implement a major four-year cost reduction initiative with the aim of cutting direct and indirect costs by £400 million per annum by 2007. Following the announcement of the Europe Beverages disposal, the target cumulative savings have been reduced from £400 million to £360 million reflecting the target cumulative saving of the disposed business. It is still expected that the investment required to deliver the £360 million of cost savings will be £800 million, split between £500 million of restructuring and £300 million of capital expenditure. No adjustment arose from the decision to dispose of Europe Beverages as its investment had been incurred pre-disposal.
Key highlights of the Fuel for Growth programme are as follows:
- In 2005, Fuel for Growth projects generated £90 million of gross savings, in line with our expectations.
- Savings were principally generated from headcount reductions, factory closures and enhanced production processes.
- The cumulative savings since the initiative began in mid-2003 are £180 million compared to expected total cost savings of £360 million by 2007.
