Category: News This Week

  • Media Report Triggers Sell-off of Vapor Stocks

    Media Report Triggers Sell-off of Vapor Stocks

    Photo: Cozyta

    E-cigarette stocks fell on Aug. 5 after Chinese state media ran reports about the risks of vaping, reports Reuters.

    Huabao International Holdings tumbled 8 percent in Hong Kong morning trade while China Boton Group Co. fell 4 percent. Market leader Relx Technology closed almost 5 percent lower in New York after the Xinhua news agency published a report saying that minors were gaining easy access to e-cigarettes.

    Xinhua said its reporters made unannounced visits to e-cigarette shops in the northern cities of Tianjin and Shenyang and found that while all had signs stating sales to minors were prohibited, enforcement of the law varied in practice.

    The sell-off demonstrated how investors remain on edge and on the hunt for clues about which companies might be vulnerable to state intervention after the property, education and technology sectors were hit by Beijing regulators in recent months with unprecedented sweeping rules.

    Similar market sentiment took hold of liquor-related stocks after the Ministry of Science and Technology posted an article citing a study that linked alcohol consumption to cancer.

    Investors in Chinese companies often scrutinize state media reports for hints about regulators’ thinking.

    China is the world’s largest consumer of tobacco products, with more than 300 million smokers, according to the World Health Organization.

  • Evicted Landowners Seek Compensation

    Evicted Landowners Seek Compensation

    A resettled former commercial tobacco plantation, circa 2005 (Photo: Taco Tuinstra)

    A group of Germans and Austrians whose farmlands in Zimbabwe were expropriated during the regime of former president Robert Mugabe has asked a U.S. federal court to confirm an International Center for Settlement of Investment Disputes (ICSID) award in their favor worth more than $260 million, reports Lexis Legal News.

    In 2010, members of the von Pezold family commenced arbitration before the ICSID, alleging that the Republic of Zimbabwe breached the Germany-Zimbabwe and Switzerland-Zimbabwe bilateral investment treaties by expropriating their ownership rights, water rights and permits to use agricultural properties in Zimbabwe.

    Dating back to the early 20th century when the nation was known as South Rhodesia, the von Pezolds’ ownership rights include an interest in Zimbabwe’s largest tobacco growing and curing operation.

    In the mid-2000s, Zimbabwe compulsorily acquired mostly white-owned commercial farm properties with the stated aim of distributing them among landless Black peasants.

    On July 28, 2015, the ICSID tribunal ordered Zimbabwe to return the properties and their water rights to the von Pezolds. Zimbabwe appealed but lost. On Nov. 21, 2018, an ICSID committee ordered Zimbabwe to bear in full the arbitration costs and compensate the von Pezolds for 50 percent of their attorney fees and expenses plus interest.

    In their petition to the U.S. District Court for the District of Columbia, the von Pezolds state that under the awards with interest, as of July 16, 2021, Zimbabwe owes them $263,210,747.65, £10,137,881.88, ZAR745,498.49 and €1,163.13, with interest continuing to accrue.

    Tobacco Reporter has extensively covered the aftermath of Zimbabwe’s controversial land reforms, most recently in June 2018.

  • KT&G Quarterly Profit Down on Strong Won

    KT&G Quarterly Profit Down on Strong Won

    Photo: mnimage

    KT&G Corp.’s second-quarter net profit fell 16 percent from a year earlier, primarily due to a strong won.

    Net profit for the three months that ended in June was KRW246.4 billion ($215 million) compared with KRW293 billion in the comparable 2020 period, the company said in an earnings release.

    “The won’s strength [against the U.S. dollar] drove down the dollar-denominated earnings [when converted into the local currency],” a company spokesman told the Yonhap News Agency.

    Operating profit declined 16 percent to KRW330.14 billion in the second quarter from KRW394.12 billion a year ago. Sales rose 2.1 percent to KRW1.35 trillion from KRW1.32 trillion during the comparable 2020 quarter.

    KT&G sold 10.34 billion cigarettes in South Korea in the first three months, 170 million fewer than a year earlier. It accounted for 64 percent of the domestic cigarette market.

    Its overseas sales fell 14 percent to 11.9 billion cigarettes from a year earlier due to weaker demand from the Middle East.

    KT&G has tobacco factories in South Korea, Russia, Turkey and Indonesia with a combined annual capacity that reached 13.6 billion cigarettes.

  • 22nd Century to Start Trading on Nasdaq

    22nd Century to Start Trading on Nasdaq

    Photo: Randy Harris

    The common stock of 22nd Century Group has been approved for uplisting to the Nasdaq Capital Market effective as of the market open on Aug. 16, 2021. The shares will continue to trade under the ticker symbol “XXII.”

    “While remaining dedicated to our primary mission to reduce the harm caused by smoking, uplisting to the Nasdaq also aligns 22nd Century with other high-achieving, innovative and growth-oriented global science and technology companies,” said James A. Mish, CEO of 22nd Century Group, in a statement.

    “We believe that joining the Nasdaq will enhance our visibility to a wide audience of institutional investors and increase our exposure to hemp/cannabis investors at this important time of industry progression toward mass production.”

  • Quarterly Sales and Income up for Universal

    Quarterly Sales and Income up for Universal

    Photo: Universal Corp.

    Universal Corp. reported sales and other operating revenue of $350 million in the three months that ended June 30, 2021, up 11 percent over that reported in the comparable 2020 quarter. Operating income was up 24 percent to $10.6 million. On an adjusted basis, operating income increased 190 percent to $12.6 million. The company’s gross profit margin was up 80 base points to 17.8 percent.

    “We are off to a good start for fiscal year 2022,” said George C. Freeman, III, chairman, president and CEO of Universal, in a statement. “Results for our tobacco operations segment improved on higher African carryover tobacco shipments and a favorable tobacco product mix in the three months ended June 30, 2021, compared to the three months ended June 30, 2020. Our ingredients operations segment, which includes our October 2020 acquisition of Silva International Inc., delivered very strong performance in the three months ended June 30, 2021.

    “It is exciting to begin to see the positive outcome from our capital allocation strategy, which we put in place in May 2018 with the goal of ensuring that we are well positioned for the future. Investments in our tobacco business have enabled us to expand the supply chain services we provide our customers and to create footprint rationalization efficiencies, and we are seeing the returns from those investments in our results.”

    Freeman said Covid-19-related vessel and container shortages had created logistical restraints for many industries, but the company was not yet able to determine what, if any, impact those constraints would have on shipment timing or its results.

    “We are continuing to monitor these and other pandemic-related conditions which affect our operations,” he said.

  • SWM Announces Second-Quarter Results

    SWM Announces Second-Quarter Results

    Photo: SWM

    Schweitzer-Mauduit International reported sales of $377.8 million in the second quarter of 2021, up 48.6 percent (11 percent on organic basis) from the comparable 2020 quarter. GAAP operating profit was $15.9 million, down $18.5 million, and included $19.2 million of transaction costs and incremental purchase accounting expenses driven by the acquisition of Scapa, which closed April 15, 2021. Adjusted operating profit was $44.6 million, up 3 percent from a year ago.

    Engineered Papers segment sales were $125.8 million, up 4 percent, driven by a 3 percent volume increase, unfavorable price/mix of 4 percent and a 6 percent currency benefit, primarily related to the euro.  The volume performance was attributable to growth in nontobacco products, such as battery papers, furniture laminates and packaging. The negative price/mix effect was primarily a function of lower low-ignition propensity volumes as certain customers resumed more normalized order patterns versus 2020 when they built inventories. Accelerated growth in reduced-risk heat-not-burn products continued to be a positive driver within the tobacco business.

    “The strength of our portfolio was again evident during the quarter as an increase in global economic activity drove very strong demand across the business,” said Jeff Kramer, CEO of SWM, in a statement.

    “Excluding the benefit of the Scapa acquisition, overall sales increased double-digits, and we are confident that robust order activity will continue in the coming quarters. We also closed and began integrating the largest acquisition in our history as Scapa joined our portfolio, putting us in even better position to drive sustainable long-term profit growth. And while we were not immune to global supply chain challenges, our teams again demonstrated their flexibility and skill in delivering against these increased volumes, resulting in second-quarter adjusted EPS of $0.90.”

  • ‘Doctors Confused About Nicotine’

    ‘Doctors Confused About Nicotine’

    Photo: agongallud

    More than 75 percent of U.S. physicians believe that nicotine directly contributes to cancer and cardiovascular disease, reports Filter, citing a recent study in the International Journal of Environmental Research and Public Health.

    The study assesses the impact of wording on perceptions of nicotine use. Two versions of a questionnaire were given to 926 physicians, asking about the “extent to which they agree or disagree that ‘nicotine’ [version one] or ‘nicotine, on its own,’ [version two] directly contributes to birth defects, CVD [cardiovascular disease], cancer, depression and chronic obstructive pulmonary disease (COPD).”

    For version one of the questionnaire, 85 percent and 85.2 percent of physicians “strongly agreed” that nicotine directly contributed to cancer and COPD, respectively. For version two, 69.6 percent and 67.3 percent “strongly agreed” with those statements.

    The study showed a difference in perceptions between medical specializations as well—pulmonologists were the least likely to hold misperceptions about nicotine, and family medicine physicians were the most likely to hold misperceptions about nicotine.

    “Even after accounting for question version, the proportion of surveyed physicians who believe that nicotine directly contributes to these health outcomes is alarmingly high,” the study authors wrote. “It is possible that participants are conflating the addictive effect of nicotine with the comparatively more harmful effects of tobacco use.”

    “It is very important for physicians to understand the relative harm between nicotine and the other 7,000 toxins in tobacco smoke,” said Michelle Bover Manderski, lead researcher. “This is especially important as physicians play a key role in recommending and prescribing FDA-approved nicotine-replacement medications.”

  • KT&G Expanding in Europe and Central Asia

    KT&G Expanding in Europe and Central Asia

    Photo: KT&G

    KT&G launched lil Solid 2.0 in Armenia and Serbia in Eastern Europe and Kazakhstan and Kyrgyzstan in Central Asia in the second quarter of 2021, reports The Korea Times.  

    Lil Solid 2.0 is available in two colors, stone gray and cosmic blue. KT&G will introduce seven types of tobacco sticks for use with the device, including Fiit Regular, Fiit Regular Sky and Fiit Crisp. Types may vary across markets, though.

    “Our product, lil, is gaining popularity in the export markets thanks to our collaboration with Philip Morris International,” said Lim Wang-seop, head of KT&G’s NGP business division, during a conference call in February. “We originally set a goal of entering a single-digit number of countries this year, but we have changed it to the double digits.”

  • Chengdu Cigar Expo Postponed

    Chengdu Cigar Expo Postponed

    Photo: Govan

    The 2021 International Cigar Expo, which was scheduled to take place Nov. 8–10 in Chengdu, China, has been postponed because of the persisting Covid-19 pandemic.

    The decision aims to protect the safety and health of exhibitors, visitors and staff.

    Although by the end of July over 95 percent of booths had been booked, it is still difficult for exhibitors and visitors from overseas to attend the expo amid the current pandemic, according to the organizers.

    The new dates will be announced in due course.

  • Video: Polish Authorities Dismantle Illicit Factory

    Video: Polish Authorities Dismantle Illicit Factory

    The Polish authorities have dismantled an organized crime group involved in the production of illegal cigarettes, reports Europol.

    On July 27, more than 100 officers from Poland’s border guard searched locations across the province of Warsaw. An illicit factory was dismantled, and 16 suspects were charged for their involvement in this illegal tobacco activity. The leader of the criminal organization features among those arrested.

    More than 1.6 million counterfeit cigarettes were seized on site by the Polish authorities alongside 13 tons of tobacco that could have been used to produce a further 13 million cigarettes. The tax loss for the Polish treasury is estimated at about €3.8 million ($4.51 million).  

    The factory’s estimated production capacity was approximately 1 million cigarettes per day. The counterfeit cigarettes were destined predominantly for the U.K. and Germany, where they would have had a value of up to €9.7 million.