Category: Featured

  • Vector Group Reports Strong Earnings

    Vector Group Reports Strong Earnings

    Photo: MIND AND I

    Vector Group announced financial results for the three months ended March 31, 2021.

    “Vector achieved strong earnings performance in the first quarter in our tobacco and real estate businesses, a testament to our team’s hard work and our commitment to creating long-term stockholder value,” said Howard M. Lorber, president and CEO of Vector Group, in a statement.

    “Our Liggett subsidiary continues to successfully execute its market strategy, and our Douglas Elliman real estate business saw continued and robust closed sales activity.”

    The company reported consolidated revenues of $543.8 million, up 19.6 percent compared to the prior year period. Reported net income was $32 million. Adjusted net income was $45.3 million. Reported operating income was $90.2 million, up $95.1 million over the prior year period.

    Tobacco segment operating income was $81.6 million, up 18 percent over the prior year period.

    Adjusted EBITDA was $94.3 million, up 57 percent. Tobacco segment adjusted EBITDA was $80.6 million, up 13 percent.

  • Indonesia: Profits Plunge After Tax Hike

    Indonesia: Profits Plunge After Tax Hike

    Photo: Taco Tuinstra

    The profits of Indonesia’s two biggest cigarette manufacturers dropped significantly following a cigarette excise tax hike, reports The Jakarta Post.

    Gudang Garam and Sampoerna saw their net profits decline 28.62 percent year-on-year to IDR1.74 trillion ($120.6 million) and 22.13 percent to IDR2.58 trillion, respectively, in the first quarter of the year.

    The two companies’ net profits were hit by rising excise costs on top of weak cigarette demand. The finance ministry raised cigarette excises by around 12.5 percent starting in February after raising them 23 percent last year to deter smoking and raise state revenue.

    However, the hike applied to only machine-made cigarettes and not to hand-rolled cigarettes.

    Most of tobacco companies’ sales volume in Indonesia comes from machine-made clove cigarettes.

  • Indian Farmers Worried About Tobacco Prices

    Indian Farmers Worried About Tobacco Prices

    Photo: Tobacco Reporter archive

    Tobacco farmers in Andhra Pradesh are concerned about declining tobacco prices, reports The Hindu.

    When the auctions opened, buyers were offering more than INR180 ($2.44) per kg for bright grade varieties in the country’s most prominent tobacco-growing province. Now, the same varieties are fetching INR170 per kg at best, a group of farmers at the Vellampalli auction platform said.

    To date, only 7.26 million kg have been traded against an estimated production of more than 70 million kg in the traditional tobacco-growing areas under the purview of the Southern Light Soils (SLS) and the Southern Black Soil (SBS) auction platforms. Tobacco production was also impacted by unseasonal rains in the Nellore and Prakasam districts.

    In SBS auction platforms, the average price realized for the 3.55 million kg marketed so far has dropped to INR170.95 kg now. In SLS auction platforms, the 3.71 million kg marketed to date fetched an average price of INR173.30 per kg, according to the Tobacco Board.

    Vellampalli II Tobacco Growers’ Association President N. Chimpriya called for intervention by the State Trading Corp., pointing to the foreign exchange traditionally earned by the tobacco sector.

    Last year, Indian tobacco farmers incurred significant losses due to a prolonged Covid-19 lockdown. Tobacco growers fear disruption this year, too, as India struggles with a steep surge in infections.

  • 22nd Century Reports ‘Exciting’ First Quarter

    22nd Century Reports ‘Exciting’ First Quarter

    Photo: snowing12

    22nd Century Group reported net sales revenue of $6.8 million for the first quarter of 2021 compared to $7.1 million in the 2020 first quarter.

    Gross profit improved by $360,000 to $647 thousand; gross profit margin improved by 540 basis points. Gross profit margin improved year-over-year for the fifth consecutive quarter.

    Net loss for the first quarter of 2021 was $5 million compared to $4 million in the same quarter last year. The change in net loss was driven by investment in anticipation of a modified-risk tobacco product (MRTP) designation of 22nd Century’s VLN cigarettes.

    Adjusted earnings before interest, taxes, depreciation and amortization for the first quarter of 2021 was a $4.4 million loss compared to a $3.2 million loss for the first quarter of 2020.

    In a press release, the company said its financial position is strong, with cash, cash equivalents and short-term investment securities totaling $30.9 million at the end of the first quarter of 2021.

    “Our 2021 is off to an exciting start as we anticipate achieving multiple key milestones that will dramatically expand our commercial opportunities in both our tobacco and hemp/cannabis franchises,” said James A. Mish, CEO of 22nd Century Group.

    “I remain highly confident in our MRTP authorization. We continue to steadily increase our advocacy activities at both the federal and state levels to achieve MRTP authorization in support of this critical public health issue. In addition to our primary VLN launch strategy to go to market within 90 days of authorization, we remain willing to license our technology to every cigarette manufacturer to help them join us in our efforts to reduce the harm caused by smoking and to protect future generations from ever becoming addicted to cigarettes.”

  • STG Raises Guidance After Strong Quarter

    STG Raises Guidance After Strong Quarter

    Photo: STG

    For the first quarter of 2021, Scandinavian Tobacco Group (STG) delivered a stronger than expected organic growth in net sales and earnings before interest, taxes, depreciation and amortization (EBITDA). The results were driven by a continued high demand in handmade cigars in the U.S., synergies from the integration of Agio Cigars and the transformational program Fueling the Growth, according to STG. Additionally, the results were positively impacted by timing of orders between quarters.

    Net sales were DKK1.88 billion ($304.53 million), reflecting with 12.5 percent organic growth. EBITDA before special items was DKK527 million, with 49.1 percent organic growth. The EBITDA margin was 28 percent compared with 18.5 percent in the comparable 2020 quarter.

    The integration of Agio Cigars is ahead of plan, according to STG, which has revised expected cost savings upward.

    “Demand and consumer behavior remain positively impacted by the Covid-19 pandemic with high consumption of handmade cigars and smoking tobacco products in the U.S.,” the company wrote in a press release. “The integration of Agio Cigars is running ahead of schedule and is now expected to deliver about DKK100 million in synergies for the year and about DKK250 million run-rate by the end of 2022. The combined market shares for machine-rolled cigars in key European markets continue to develop satisfactorily.”

    Despite the continued challenges and uncertainty created by the Covid-19 pandemic, our business continues to do well.

    At the same time, STG noted that Covid-19 is creating significant uncertainty in the second half of the year. “Consumption of handmade cigars and purchasing patterns between online and brick-and-mortar retail stores in the U.S. cannot be forecasted with the normal level of accuracy,” the company stated. “Both are factors with significant impact on the group’s performance. Consequently, a range is introduced for the expected organic EBITDA performance as well as the cash flow before acquisitions.

    For 2021, the company now expects organic EBITDA growth in the range of 12 percent to 18 percent, up 7 percent over the earlier forecast.

    “Despite the continued challenges and uncertainty created by the Covid-19 pandemic, our business continues to do well,” said STG CEO Niels Frederiksen. “For the first quarter of the year, we can present strong growth in both net sales and EBITDA. I am particularly pleased to see that numerous initiatives across the organization are resulting in strong net sales, growing market shares as well as increased operational performance and efficiency.”

  • PMI appoints Jacek Olczak as CEO

    PMI appoints Jacek Olczak as CEO

    Jacek Olczak (Photo: PMI)

    Philip Morris International (PMI) appointed Jacek Olczak as CEO following the company’s 2021 annual shareholders meeting on May 5. Most recently the company’s chief operating officer, Olczak was also elected to the board of directors. Andre Calantzopoulos, who served as PMI’s CEO from 2013, was appointed executive chairman of the board prior to the meeting. Lucio Noto stepped down from his role as interim chairman of the board and was reelected to the board of directors.

    In accepting his appointment as CEO, Olczak committed to accelerating PMI’s smoke-free transformation, announced in 2016. The company says it is focused on developing, scientifically substantiating and responsibly commercializing smoke-free products that are less harmful than smoking, with the aim of replacing cigarettes as soon as possible.

    “I am humbled and excited to lead PMI as we accelerate our transformation into a smoke-free company,” said Olczak in a statement. “PMI is an industry leader in scientific innovation, and our ambition is that more than half of our net revenues will come from smoke-free products in 2025. Our evolving portfolio will drive our long-term future. We will lean into our scientific research and expertise, using our collective skills and imagination to innovate beyond our existing portfolio and explore new areas of business development.”

    We will lean into our scientific research and expertise, using our collective skills and imagination to innovate beyond our existing portfolio.

    Olczak began his career with PMI in 1993. He started in finance and general management positions across Europe, including as managing director of PMI’s markets in Poland and Germany and as president of the European Union region, before being appointed chief financial officer in 2012. He held that position until 2018, when he became PMI’s chief operating officer. He holds a master’s degree in economics from the University of Lodz, Poland.

    Olczak has been a vital driver of PMI’s smoke-free transformation, which moved into its commercialization phase with the launch of IQOS in Nagoya, Japan, in 2014. Under his oversight as chief operating officer, PMI increased the portion of its net revenues derived from smoke-free products to 28 percent in the first quarter of 2021. Further, the company grew the geographical coverage of its smoke-free products from zero to 66 markets in key cities or nationwide as of March 31, 2021. And Olczak led PMI’s commercial transformation, successfully developing it from a primarily business-to-business company to an increasingly business-to-consumer company.

    Jacek is ideally placed to deliver PMI’s smoke-free vision in his new role as CEO.

    “Jacek is ideally placed to deliver PMI’s smoke-free vision in his new role as CEO,” said Calantzopoulos. “His passion for the company and our employees underpins his drive for results, as does his deep knowledge of our products, systems, values and investors. I believe he is the ideal leader to ensure our business’ continued growth and deliver shareholder value. I look forward to continuing to work with him in my new capacity as executive chairman of the board.”

    Approximately 85 percent of the shares entitled to vote were represented at the meeting in person or by proxy. The shareholders elected 13 nominees for director; approved, on an advisory basis, the compensation of named executive officers; and ratified the selection of PricewaterhouseCoopers as independent auditors.

  • New Checks on U.K. Track-and-Trace Codes

    New Checks on U.K. Track-and-Trace Codes

    Photo: vchalup

    Her Majesty’s Revenue & Customs (HMRC) has introduced new checks on the codes that are given to tobacco retailers to ensure that they are registered properly for the U.K. track-and-trace system, reports Talking Retail.

    Businesses throughout the tobacco supply chain have an economic operator ID code for their business and a facility ID code for each site. Over the next eight weeks, any codes that are not recognized by the track-and-trace system will generate a warning, allowing businesses time to investigate by logging any issues with the ID Issuer website.

    After June 27, messages containing codes that fail the new checks will generate an error message. Retailers that receive an error message must take action to correct the error before continuing to move tobacco products through the supply chain.

    “We have worked extensively with HMRC to support retailers with the implementation of the tobacco track-and-trace system since its introduction in 2019, and we hope that this is another step toward only legitimate businesses being involved in the tobacco supply chain,” ACS’ chief executive, James Lowman, was quoted as saying.

    “We welcome the eight-week grace period, which should give businesses time to investigate any issues with their codes.”

  • 22nd Century Installs Nicotine Equipment

    22nd Century Installs Nicotine Equipment

    Photo: Nitiphol

    22nd Century Group is advancing and expanding the capabilities of the laboratory at its cigarette manufacturing facility in Mocksville, North Carolina, USA, for testing of its VLN reduced nicotine content tobacco and cigarettes. The company estimates that its cost per VLN sample will improve by more than 90 percent, and the lead time for key data will take less than a day compared to using a third-party testing service that can take weeks.

    “This is an important investment and milestone for 22nd Century, as it is imperative to the launch of VLN and the future of the organization that we have the ability to rapidly conduct high-precision analysis of our own products at higher testing volumes,” says James A. Mish, CEO of 22nd Century Group, in a press note.

    22nd Century now has the same lab testing equipment and capabilities as outside facilities. The company is also working toward receiving ISO/IEC 17025 accreditation, which grants international recognition of an organization’s commitment to quality, competency and reliable results. This accreditation demonstrates to customers and industry that 22nd Century has the technical competence to provide reliable and accurate test results even at the lowest nicotine levels.

    Earlier this year, 22nd Century announced that it significantly expanded its tobacco growing program to support the anticipated demand for its VLN cigarettes.

  • Uganda Promoting Local Cigarette Production

    Uganda Promoting Local Cigarette Production

    Photo: Taco Tuinstra

    Uganda’s Parliament has passed a bill scrapping taxation on processed tobacco and restricting it to unprocessed leaf for export, the Parliament’s website reported. The measure is meant to promote local value addition and improve revenue.

    According to finance committee chairman Henry Musasizi, levying tax on both processed and unprocessed leaf will undermine the efforts of companies that have set up plants to process it locally and justify the efforts of those companies that moved out of Uganda.

    “We shall also experience an increase in contraband and smuggling of cigarettes into Uganda, loss of jobs to Ugandans working in the processing plants and stifle agri-industrialization,” Musasizi said.

    Representative Syda Bbumba said that an export levy on unprocessed tobacco should be charged to discourage its exportation and encourage local processing of the product.

    “Tobacco growing is already exploitive on our farmers and, therefore, we should encourage value addition. We also need to increase the levy on imported cigarettes to encourage those processing tobacco to manufacture it locally,” she said.

    Representative Solomon Silwany said that the government should focus on the unprocessed leaf and tax it at a rate of $1 per kg. “We have local companies that are struggling to process and employing people; this should be our opportunity to support and encourage them to produce cigarettes as a finished product,” he noted.

    The Minister of State for Finance David Bahati, however, said that the local companies should make sure the tobacco leaf is dried and manufactured into cigarettes.

    “We do not want to be confused by these people simply drying the tobacco leaf to skip taxes instead of the more worthwhile process of manufacturing cigarettes,” he said.

  • Paul Hardman to Lead BNS Scientific Affairs

    Paul Hardman to Lead BNS Scientific Affairs

    Broughton Nicotine Services (BNS) has appointed Paul Hardman as head of scientific affairs, the latest in a series of senior level appointments, as it continues to expand its services.

    The business, which has helped electronic nicotine device companies bring noncombustible products to market, is currently expanding its full-service regulatory consultancy into modern oral nicotine products, heated-tobacco products and cannabidiol products.

    A scientist with extensive experience in inhaled product development across pharmaceutical and consumer products, Hardman will have the task of growing the scientific affairs team to enable the business to grow and offer a premium consultancy experience for clients in the industry.

    “We’re delighted to have welcomed someone of his caliber into this new role,” said Nveed Chaudhary, chief regulatory officer of Broughton Nicotine Services. “His addition to the Broughton team will strengthen the business further as we look to expand our full-service regulatory consultancy. Paul will take responsibility for delivering product development and optimization activities, drawing on his years of industry leadership and experience.”

    Prior to joining Broughton, Hardman was scientific lead with Imperial Brands, where he was responsible for designing the testing strategy for the chemistry of inhaled and oral next-generation nicotine products, from assessing a variety of prototypes at the early stages of development through to characterization of products for submission through the U.S. premarket tobacco product application process.

    He began his career working at a specialist pharmaceutical company where he gained experience of dry powder and metered dose inhaler development, including for the treatment of local lung conditions and systemic absorption. Hardman also has experience leading the quality control department in a multinational pharmaceutical company involved in the production of generic nicotine lozenges.

    Paul’s addition to the Broughton team will strengthen the business further as we look to expand our full-service regulatory consultancy.

    “I am passionate about the opportunity to work with multiple clients and really get to the heart of their products so that Broughton Nicotine Services can best serve these businesses by championing those points in their regulatory submissions,” said Hardman.  

    “My role will involve growing the team to enable us to deliver a highly effective offering as Broughton moves into new areas, and I am eager to build on the success the business has already achieved.”