Gallaher Group, the UK tobacco company which has closed its plant in Dublin in 2003, today reported a 6.6 per cent rise in 2005 profits but warned of lower profit growth in Europe during 2006 due to challenging trading conditions.
The company, whose cigarette brands include Benson & Hedges, Silk Cut and Mayfair in Britain, posted 2005 underlying pretax profits of £570 million pounds, in line with analyst forecasts of £561 million to £571 million.
Gallaher, which earns around 70 per cent of its profits in the declining cigarette markets of the UK, Ireland, Austria and Sweden, reported 2005 adjusted earnings per share up 7.5 per cent at 63.1 pence a share, compared to analysts' forecast range of 62.2 to 63.5p.
"In Europe, the challenging conditions make the tobacco operations' outlook less certain. Management believes that this will result in a reduction to the Europe tobacco targeted 2006 EBITA (earnings before interest, tax and amortisation) growth rate," the group said in a results statement.
The world's fifth-largest cigarette maker said its total volumes rose 2 per cent, driven largely by central and eastern European growth, while it looks to cost-cutting and price rises to boost profits in mature western European markets.
It also faces a ban on smoking in pubs, clubs and indoor public spaces in England by mid-2007, which follows a similar smoking ban in Ireland since April 2004.