Gallaher overcomes setbacks to post record results
Silk Cut-to-Hamlet group Gallaher today said it achieved record profits last year despite tough markets and the weak US dollar.
The company said pre-tax profits in the year to December 31 came in at £429m (€624m), up 13.3% on last year’s £379m (€552m).
Gallaher said it achieved the strong performance by developing its business in existing and emerging European and Asian markets, despite difficult trading in continental Europe.
The group increased continental European volume sales by 6.4% to 50.5 billion cigarettes, with market share gains in countries such as Poland and Italy offsetting disruption to volumes in other markets such as Austria and Germany.
However, earnings in its rest-of-the-world operation fell to £50m (€72.8m) from £53m (€77.2m) due to a fall in Africa, Middle East and Republic of Ireland volumes and adverse exchange rate movements.
The impact of an 11.3% decrease in rest-of-world cigarette volumes to 8.9 billion cigarettes and the weaker euro and US dollar were partly offset through efficiency gains, including cost benefits from the group’s operational restructuring, it said.
In January, Gallaher announced plans to restructure its two UK factories as part of an overhaul that could affect 250 jobs in Europe.
The company said it was likely 80 positions would go in the UK and North, where Gallaher employs 1,080 people at Lisnafillan near Ballymena and Cardiff – leaving Cardiff as the company’s only cigar-making site.
As well as those changes, Gallaher said it planned to close the Schwaz cigarette and Furstenfeld cigar factories in Austria during 2005.
Gallaher said the restructuring was continuing in line with expectations, with overall exceptional charges in 2004 totalling £17m (€24.7m) against £39m (€56.8m) in 2003.
Profits before tax, goodwill and exceptional charges increased by 5.8% to £529m (€770m). The group said current trading was in line with expectations.
Chief executive Nigel Northridge said: “We remain confident in our future and totally committed to maximising shareholder returns.”
