Gallaher enjoys 15% surge in pre-tax profits

Tobacco company Gallaher, which makes Benson & Hedges cigarettes, today reported a 15% surge in pre-tax profits for last year and said 2003 was on track to meet market expectations.

The group, which also makes the Silk Cut brand and Hamlet cigars, said sales in the year to December 31 had risen by 42% to 152.7 billion cigarettes, driven by strong growth across international operations.

Pre-tax profits were £378m (€548m) compared with £329m (€477m) in 2001, aided by the first full year of contributions from Austria Tabak, the firm Gallaher acquired in 2001.

Turnover soared by 47% to £8.4bn (€12.1bn) because of the benefit of Austria Tabak sales.

Since floating in 1997, Gallaher has been pushing its expansion overseas in an effort to reduce its exposure to the flagging UK market.

The move has seen Gallaher increase its presence in Central and Eastern Europe, the former Soviet Union, Central Asia and Asia Pacific. It is pushing into China after establishing offices in Beijing, Shanghai and Guangzhou.

In the UK, which provides 44% of revenue, Gallaher said it had reversed the recent downward trend in market share with volumes down a fraction to 21.4 billion cigarettes from 21.5 billion in 2001.

Cheaper brands such as Mayfair are playing a bigger part in the UK market where cigarette consumption has fallen as smokers give up, cut back or take advantage of lower-taxation on cigarettes purchased in Europe.