Category: News This Week

  • Riley to replace Nelson as head of Philip Morris Fortune Tobacco

    Cigarette maker Philip Morris Fortune Tobacco Corp. will have a new president starting  May 1, taking the reins from Chris Nelson who is retiring effective on the same date.

    In an emailed statement, the company said Nelson will be succeeded by Paul Riley, another company veteran, as PMFTC president.

    “Chris has long expressed his desire to retire after 10 years in the Philippines with PMPMI (Philip Morris Philippines Manufacturing) and PMFTC and more than 27 years in Philip Morris International,” the PMFTC statement read.

    Nelson is a 32-year veteran in the tobacco industry. He will be retiring in the Philippines.

    Riley joined Philip Morris in Australia in 1988 and “assumed roles of increasing responsibility” in Hong Kong, Thailand, Japan and recently as managing director of  the PMI affiliate in the Republic of Serbia, Montenegro and Central Europe South.

  • Tax hike leaves retailers, puffers smoking mad

    An increase in in Canada’s Manitoba province’s tobacco tax has some smokers and tobacconists worried about the holes it’s expected to burn through their wallets and bottom lines.

    On  April 16, the province announced an immediate $0.04 hike in the tax, to $0.29 per cigarette, as part of its 2013 budget, according to a story in the Brandon Sun.

    Peter Patel, owner of Up In Smoke Tobacconist, said he was caught off guard when he first learned of the hike on the radio.

    “People are mad,” said Patel, adding he spent all of last Wednesday updating his prices and cash registers.

    “They should be informed beforehand.”

    The increase amounts to an extra dollar per pack of 25 cigarettes and includes an extra $0.04 per gram on fine-cut and raw leaf tobacco. The province expects to bring in an extra $17.2 million from the tax, which will be redirected into health care.

    Overall, Manitoba expects to collect $283 million from tobacco taxes this year. The increase makes Manitoba smokers the most heavily taxed in Canada.

  • ‘Light’ label could cost Altria $544 million

    Altria Group Philip Morris USA unit falsely marketed its “light” cigarettes as a healthier choice than regular cigarettes and should pay $543.6 million in restitution to California smokers, a lawyer said at the start of a trial, according to a story in Bloomburg News.

    Mark Robinson, who represents smokers who brought the lawsuit as a class action, said in state court in San Diego today he will present internal Philip Morris documents proving its top executives were aware that Marlboro Lights were as addictive and dangerous to smokers as Marlboro Reds and continued selling the Lights as a healthy alternative.

    “Their own documents tell the truth,” Robinson said in his opening statement at the nonjury trial. He said financial experts will testify in support of his request for damages for a class of smokers from January 1998 to April 2001.

    The case, filed in 1997, accused Philip Morris and other tobacco companies of making misleading statements about the health risks and addictiveness of smoking, and sought restitution for money that smokers spent on cigarettes.

    Philip Morris USA, based in Richmond, Virginia, is the only remaining defendant in the case and the only claim still at issue is that it made false statements concerning light cigarettes. California Superior Court Judge Ronald S. Prager is presiding over the trial.

  • Japan Tobacco tops competition, forecast beats estimates

    Japan Tobacco, the world’s best-performing cigarette maker this year, forecast a record profit that beat analyst estimates and raised its projected annual dividend by 35 percent on rising overseas sales and a weaker yen, according to Bloomberg News.

    Net income will probably be ¥415 billion ($4.2 billion) for the year ending March 2014, the Tokyo-based company said today in a statement. The outlook is higher than the ¥412 billion average of 18 analyst estimates compiled by Bloomberg.

    Japan Tobacco, which aims to make its Mevius the No. 1 global premium brand, is benefiting as a weaker yen boosts the value of overseas revenue, which accounted for about 48 percent of the company’s total in the last fiscal year. Asia’s biggest listed cigarette maker also said it would raise its payout ratio to 50 percent by fiscal 2015, one year earlier than previously planned, to support shareholders.

  • BAT sales up 5 pct, driven by global brands

    British American Tobacco reported revenue growth of 5 percent at constant rates of exchange in the first quarter ended March 31, adding that global drive brand cigarette volumes grew by 1 percent.

    The report stated:

    • Revenue growth of 1 percent at current rates of exchange.
    • Cigarette volumes from subsidiaries fell 3.7 percent to 160 billion, with a decrease of 3.4 percent for total tobacco volumes.
    • Board confident of another year of earnings growth in line with long term strategic goals.
    • Pricing environment remains strong despite difficult trading conditions in many parts of the world, notably southern Europe.
    • If current exchange rates persist for the rest of the year, the currency headwind that adversely impacted the quarter will reverse.
    • Group has sufficient financing and facilities available for the foreseeable future.
    • There have been no material events, transactions or changes in the financial position of the Group since the year end.
    • -Shares closed Wednesday at 3548 pence valuing the company at £68.25 billion.

  • Altria plans e-cig sales, Marlboro demand falls

    Altria Group, the largest seller of tobacco in the U.S., plans to introduce an e-cigarette this year, chasing smaller rivals as demand for traditional smokes declines.

    The e-cigarette will be sold in an undisclosed market starting in the second half of 2013, Richmond, Virginia-based Altria said today in a statement. The company declined to provide additional information until a conference call with analysts today, according to a story in Bloomburg News.

    CEO Martin Barrington is trying to catch up to smaller rivals such as closely held NJOY and Lorillard Inc., which says its Blu e-cigs brand controls more than 40 percent of the U.S. market. Reynolds American Inc. said this week it plans to expand its Vuse e-cigarette this year.

    First-quarter cigarette shipments fell at Altria, Winston-Salem, North Carolina-based Reynolds and Greensboro, North Carolina-based Lorillard. Altria’s U.S. volume tumbled 5.2 percent, with top-selling Marlboro slipping 5.5 percent.

    Lorillard CEO Murray Kessler told analysts yesterday the company estimates that e-cigarette sales displaced consumption of about 600 million cigarettes in the first quarter. That translates to an annual rate of about 2.4 billion cigarettes, accounting for about 1 percent of the U.S. market, according to Kenneth Shea, a Bloomberg Industries analyst in Skillman, New Jersey.

  • IMHA urges brand protection

    The trade body representing the global hologram industry is urging organisations to review and if necessary redouble their brand protection and authentication strategies to stem the “hemorrhage” of counterfeit goods flowing out of china.

    That’s the stark message from the International Hologram Manufacturers Association (IHMA) which was commenting on a new UN report that says a staggering 75 percent of all the fake goods seized worldwide between 2008 and 2010 came from China.

    According to the UN Office on Drugs and Crime (UNODCO), these counterfeit goods make up almost 2 percent of global trade while organized crime groups, who deal in fake goods and drugs among other items, are pocketing $90 billion annually across the Far East region.

    The Transnational Organised Crime in East Asia and the Pacific: A Threat Assessment is the most comprehensive study yet on the subject.

    The report is a sobering reminder that the war on counterfeiting is far from over, says the IHMA, and will be a wake-up call for those desperate to protect brands and profits not only in the Far East but worldwide.

  • UK campaigners condemn ‘sexist’ study on plain packaging

    Campaigners in the U.K. opposed to plain packaging of tobacco have described as “sexist” a study that says young female smokers get less satisfaction and less enjoyment from smoking cigarettes that come in plain, standardized packs.

    Hands Off Our Packs campaigner Angela Harbutt, a smoker, said, “The idea that plain packaging will have a greater impact on young women suggests that women are more easily influenced than men. This is not only an outdated view of women, it’s also incredibly sexist.

    “Women can think for themselves and if they enjoy smoking, as many do, the packaging will make no difference. It may influence which brand they buy, but not their habit.”

    According to researchers at Stirling University, women in the study said they were more embarrassed about smoking from plain packs and felt more negative about smoking from the plain packs, even though they were smoking their regular cigarettes.

    The same women allegedly reported smoking fewer cigarettes, stubbing out cigarettes early, smoking less around others and thinking more about quitting when using the plain packs.

    Harbutt added, “This is perfectly normal behavior but it doesn’t last.”

  • E-cigarettes could turn kids into smokers, health department says

    The Philippine health department warned the public on April 12 against e-cigarettes, saying the tobacco substitute could turn children into smokers.

    E-cigarettes have been gaining favor among Filipinos as higher tobacco taxes make smoking more expensive, according to a story in the Manila Times.

    Food and Drug Administration director-general Kenneth Hartigan-Go disputed what he said were claims by vendors that e-cigarettes helped smokers kick the habit.

    “Wittingly or unwittingly, the electronic cigarette promotes smoking among children and the youth. It makes them less fearful of hazards and risks of smoking,” he said in a health advisory posted on its website. “The public is advised not to smoke at all and not to use cigarettes, cigars, or e-cigarettes,” added Hartigan-Go.

    Nearly one in five Filipinos smokes, according to the health department.

    A law that came in effect this year will gradually raise the tax on cigarettes over five years, which would roughly double the price per pack to about PHP52 ($1.27) by 2017.

    A basic e-cigarette kit in the Philippines costs as little as $24, featuring a battery-powered vaporiser that delivers a nicotine-laced mist.

  • Indonesia: Cigarette makers blame costs for lower profits

    Cigarette manufacturers in Indonesia blamed higher production costs and currency fluctuations for the slow-down in their business throughout 2012.

    Revenues at PT Gudang Garam increased by 17.1 percent to reach IDR49.03 trillion ($5 billion). However, their spending also increased, jumping 25.6 percent to IDR39.84 trillion. The higher spending and losses from currency fluctuations ultimately saw the company book IDR4.01 trillion in net profits in 2012, an 18 percent decline from the previous year, according to a story in the The
    Jakarta Post.

    Another cigarette maker, PT Bentoel Internasional Investama announced that its revenues fell slightly by 2.2 percent to IDR9.85 trillion. Along with Gudang Garam, it also posted higher costs of goods sold (COGS) last year, which were up 5.5 percent to IDR8.18 trillion.

    Bentoel said that it suffered IDR323.35 billion in net losses, compared to IDR306 billion in net profits in 2011. In a statement submitted to the Indonesia Stock Exchange, it attributed the net losses to the significant increase in the clove price. At the same time, it added, sales dropped as a result of higher excise duties.

    Meanwhile, PT HM Sampoerna reported a 26 percent rise in revenues to IDR66.63 trillion in 2012, as a result of higher sales. Last year, it managed to sell up to 107.7 billion cigarettes, a rise of 17.4 percent from 2011.

    Sampoerna’s COGS were up by almost 28 percent to IDR48.12 trillion and its net profits surged 23.3 percent to IDR9.94 trillion in 2012. The increased COGS pushed the company’s net profits-to-revenue margin down to 14.9 percent from the previous 15.3 percent in 2011.

    Separately, PT Wismilak Inti Makmur reported that its revenues climbed 20.9 percent to IDR1.12 trillion from 2011, thanks to higher sales, which grew 11 percent to 2 billion cigarettes. With higher sales, the company also reported a surge in its COGS, which increased 22.6 percent to IDR814.42 billion.

    However, despite recording positive growth in revenue, Wismilak suffered from lower net profits in 2012, which slumped 40.3 percent to IDR77.2 billion.

    This year the government plans to increase excise duty by 8.5 percent.

    According to Trust Securities analyst Reza Priyambada, overall, the cigarette makers faced similar problems throughout 2012 with increasing raw material prices and higher excise. “It was like they were ‘attacked’ from the top and from the bottom,” he said.