Cigarette sales in the Republic of Ireland by the Gallaher combine have increased by nearly 7 per cent, partly due to sharp reductions in sales of bootleg cigarettes on the streets of Dublin and other cities.

Mr Peter Wilson, chairman and chief executive of Gallaher, said the Government had done "a great job" in driving cigarette smugglers off the streets so that bootleg sales had been reduced to negligible levels.

This contrasts with the continuing fall - approaching 6 per cent a year - of the British legitimate cigarette market due mainly to growth in purchases of cheaper cigarettes in overseas markets for resale in the domestic market.

While reduced levels of illegal cigarette sales helped to lift demand for Gallaher's cigarettes, Mr Wilson said buoyant Irish demand also reflected strong economic conditions and the flourishing tourist industry.

First-half financial results of Gallaher detail a 6.7 per cent growth in cigarette volumes in the Republic, driven by the strong performance of the continuing success of Silk Cut and Benson and Hedges. Overall, the group's operating profits fell £13 million to £167 million. Turnover fell 5.7 per cent to £1.95 billion.

International profits, including higher Republic of Ireland profits, rose 0.4 per cent to £31.7 million on turnover up 0.5 per cent at £287 million. Strong sterling chopped £4 million off reported profits and £30 million off turnover. The interim dividend is up from a notional 6.4p to 6.8p.