Smoking ban, taxes hit Gallaher
GALLAHER, the Silk Cut to Benson & Hedges cigarette group, is looking to its UK brands to counter tough trading conditions in Ireland, France, Germany and Austria through the second half of this year.
The Irish ban on smoking, huge duty rises in several European countries, ever increasing cross-border trading and adverse currency movements held the rise in first-half profits to 4% - £250m - masking what chief executive Nigel Northridge said was a strong underlying performance.
The number of cigarettes sold in the six months to end-June was up by 7.6% at 79.3bn.
Northridge said it was still too early to say what the long-term effects of the five-month-old ban on smoking in the workplace in Ireland might be.
Monthly sales have varied since its introduction at the end of March with an overall decline of 7.5% in the first half.
Earnings in Europe fell 2.3% with cigarette sales in Germany down 13.5% as the first of a three-phase tax rise was introduced in March.
French volumes fell by 25% following several duty rises and in Austria volumes fell 8% on smuggling from new European Union states. In the UK smokers continue to switch from premium to value brands such as Gallaher's Mayfair.
