Carrolls profits slump by €20m

PROFITS at PJ Carroll cigarette company fell by more than €20 million last year, according to its most recent accounts. Carrolls, which has been in business for 180 years, said profits plunged because of restructuring of the company.

Pre-tax profits for the year ended December 31, 2003, were €6.4m compared to €27.5m the previous year. The firm took a €10.4m hit on the reorganisation.

“The exceptional operating expenses relate to the costs incurred in a major reorganisation in the company’s marketing operations. These exceptional expenses comprise redundancy and pension augmentation costs together with other ancillary costs,” it said.

The decline in profits will be alarming for the tobacco industry in Ireland as the results cover the period before the ban on smoking in pubs was introduced.

In September, Gallaher Group, the largest cigarette company in Ireland with a 50% market share, said sales volumes fell by 7.4% in the first half of this year.

Carrolls is the third player in the Irish market behind Gallaher and Imperial Tobacco (John Player) with a 20% share. Gallaher is expecting smokers to consume 500 million fewer cigarettes this year.

PJ Carroll’s turnover for the year was ahead by nearly €18m at €264m, though much of this was because of increased prices and excise duty rather than sales. Turnover in Ireland was up €2.7m at €51.7m.

The company paid out €208.5m in duties to the Exchequer, up from €192.4m the previous year.

However, the Government’s take from the tobacco industry is set to drop by at least €70m because of the fall-off in sales. The industry contributes around €1.1 billion a year in taxes to the State coffers.

The number of people employed fell by six to 172, though the wages bill for the year increased from €7.6m to €8.7m, giving an average salary of just over 50,000.

Directors’ pay rose from €485,000 to €534,000. The directors include Laurence Crowley, the Bank of Ireland chairman, who also chairs PJ Carroll.

The company is part of the British American Tobacco conglomerate. In addition to the Carrolls brand it also distributes Rothmans, Major, Kent, Dunhill and Lucky Strike.

Despite the fall in profits the company paid out nearly €8m in dividends to its parent, BAT. After tax and payment of dividends, the company carried forward a loss of €1.6m into 2004.

BAT itself had a poor 2003 with a 26% drop in its profits to £1.5bn (€2.1bn) on sales of £11.4 billion.

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