Tag: cigarettes

  • Easy street: smoke smugglers net nearly $2 million a truckload

    Wanna make a quick $1,944,000? Buy a truckload of cigarettes in Virginia and sell them in New York.

    Yeah, it’s illegal. But that’s how much can be made from selling a tractor trailer’s worth (that’s 800 cases, each holding 600 packs of cigarettes) of low-tax Virginia cigarettes in high-tax New York, based on estimates from the Bureau of Alcohol, Tobacco, Firearms and Explosives.

    And that’s exactly what criminals are doing, according to a story posted on CNN.com

    In 2011, more than 60 percent of all cigarettes sold in New York were smuggled in from another state, according to the Mackinac Center for Public Policy, a free-market think tank. That’s up from about 36 percent in 2006.

    It’s not just happening in New York. Mackinac says 15 states have smuggling rates that top 20 percent. Add in counterfeit cigarettes from overseas, and ATF estimates the lost government revenue at more than $5 billion a year.

    Mackinac and others pin the blame on rising state taxes, and say things could get even worse if President Obama’s proposed 94-cent-a-pack cigarette tax hike goes through. Anti-smoking groups say the smuggling numbers are inflated, and that the public health benefits of fewer smokers – the ones dissuaded by pricey packs – far outweigh any lost revenue or other effects of smuggling.

  • Philip Morris Q1 profit declines on costs, cuts full-year EPS view

    Tobacco giant Philip Morris International Inc. Thursday reported a decline in first-quarter profit, reflecting higher costs. Meanwhile, earnings per share improved from last year. The company also lowered its full-year 2013 earnings outlook for prevailing exchange rates only, according to a story on RTTNews.com.

    However, the firm reiterated its annual constant-currency adjusted diluted earnings per share growth rate target of 10 to 12 percent, reflecting its pricing actions and market share momentum.

    Louis Camilleri, chairman and CEO of the company said, “Our first quarter was relatively difficult, with our headline results marred by a number of known factors, including inventory movements, the 2012 leap year effect, currency and a slowly improving – but nevertheless substantial erosion in our – volume in the Philippines.”

    Philip Morris, the owner of Marlboro, Parliament and Virginia Slims cigarette brands, said its Cigarette shipment volume declined 6.5 percent from last year. Excluding Philippines, shipment volume was down 2.1 percent. Philippines had unfavorable impact of the disruptive January 2013 excise tax increase.

    In the first quarter, net earnings attributable to the company declined to $2.13 billion from $2.16 billion in the previous year. However, on a per share basis, earnings rose to $1.28 from $1.25 in the prior-year quarter, reflecting lower share count. Reported earnings, excluding currency was $1.35 per share in the first quarter of 2013.

    Adjusted earnings for the recent quarter were $1.29 per share and adjusted earnings, excluding unfavorable currency of $0.07, totaled $1.36 per share.

    On average, 12 analysts polled by Thomson Reuters expected the company to earn $1.34 per share for the quarter. Analysts’ estimates typically exclude special items.

    Net revenues for the quarter grew 2.8 percent to $18.53 billion. Net revenues, excluding excise taxes, rose 1.8 percent to $7.58 billion. Nine analysts had consensus revenue estimate of $7.52 billion for the quarter. Excluding currency, the revenue increase was 3.2 percent.

    In European Union, revenues declined 4 percent, while Eastern Europe, Middle East & Africa posted a revenue growth of 11.3 percent. Asia showed a marginal improvement of 0.5 percent, while revenues from Latin America & Canada decreased 0.3 percent.

    Marketing, administration and research costs advanced to $1.62 billion from $1.51 billion in the preceding year.

    For full-year 2013, for prevailing exchange rates only, the company now expects reported earnings per share to be in a range of $5.55 to $5.65, down from the prior outlook of $5.68 to $5.78 per share.

    Excluding an unfavorable currency impact, at prevailing exchange rates, of about $0.19, reported earnings per share are still projected to increase by about 10 to 12 percent, compared to adjusted earnings per share of $5.22 in 2012.

  • Higher 1Q profit, revenue expected from PMI

    Philip Morris International Inc., which sells Marlboro and other brands abroad, is expected to report higher profit and revenue when it releases its first-quarter results before the market opens on Thursday. Whether cutting costs and raising prices continued to help PMI compensate for consumers buying fewer, or cheaper, cigarettes has investors anticipating the announcement.

    Cigarette shipments rose about 3 percent to 233.1 billion in the fourth quarter that ended in December, and it market share rose in a number of key markets, according to a story in The Washington Post.

    Shipments grew 7 percent in the company’s region that encompasses Eastern Europe, the Middle East and Africa, but fell about 6 percent in the EU as the region continues to be under pressure due to high unemployment and the continent’s government debt crisis. Shipments also fell about 1 percent in Latin America and Canada.

    In Asia, one of its largest growth areas, shipments grew nearly 6 percent. The company benefited from increases in Japan following the March 2011 earthquake and tsunami.

    The events offered the company a sales opportunity because supply disruptions led Japan Tobacco Inc., the world’s No. 3 tobacco maker, to stop shipping cigarettes within Japan.

    Philip Morris International also bought the Philippines company Fortune Tobacco Co. in February 2010, bolstering its Asian business.

  • Pakistan has $175.8 million reasons to tackle tobacco smuggling

    Pakistan is losing 17 billion Pakistani rupees ($175.8 million) per annum due to the illicit cigarette trade, which represents about 26.7 percent of total cigarettes consumed in terms of volume.

    According to a research paper compiled by the Euromonitor International, and cited in a story published by the Asia News Network, Pakistan ranked third-highest in illicit trade in Asia-Pacific countries, behind Malaysia and Hong Kong last year.

    When compared to its Asia-Pacific counterparts, over a five year period (2006-11), Pakistan’s illicit cigarette trade registered the second-highest growth of 62.77 percent after Vietnam (70.7 percent).

    During the same period China, the largest cigarette consuming economy in Asia Pacific, registered an impressive contraction in illicit trade by 18 percent.

    Total government revenue loss over the past five years due to illicit trade amounted to a staggering 80 billion rupees. This is approximately equivalent to 11 percent of the funds approved by the Public Sector Development Programme.

    The document further revealed that Pakistan’s illicit cigarette trade comprises three main types, namely, local duty-not-paid (DNP), smuggled and counterfeit. Of these, local DNP cigarettes have the dominant share unlike the global norm where smuggled cigarettes are usually the real cause of concern.

    The local DNP cigarettes made up to 84.5 percent of total illicit market, while 12 percent and 3.5 percent were smuggled and counterfeit cigarettes, respectively. This high share of local DNP suggests that situation is more of an internal problem, thus highlighting the need for improving local law enforcement.

    Euromonitor estimates that an alarming 26.7 percent of all cigarettes consumed in Pakistan last year were illicit comprising local DNP, smuggled or counterfeit. This translates to a massive volume of 23.5 billion sticks. It further stated that during 2002-2011, global illicit cigarette trade contracted by 7.3 percent, whereas in the same period, the situation in Pakistan worsened with a growth in illicit trade of 113.6 percent. In fact, volume of illicit cigarettes more than doubled from 11 billion sticks in 2002 to 23.5 billion sticks in 2011.

  • Careless smokers playing with fire

    It could be hard to believe but careless smokers ended up causing more than 2,410 fire accidents and several crores-worth of property loss in the last seven years in the Hyderabad, Andhra Pradesh.

    A study by A.P. Fire Services Department revealed careless smoking as one of the main causes for the increasing incidence of fire accidents — the other contributing factors being electrical short-circuit, gas leakage, fire crackers and chemical reaction, among others, according to a story published in The Hindu.

    According to officials, cigarette butts that were not properly put off before being chucked, sparked fire in several incidents, one such case being the fire mishap that occurred at the multi-storeyed Babu Khan Estate in Basheerbagh a few days ago.

    Careless smoking led to 461 fire accidents in the year 2012, 392 in 2011 and 298 in 2010. Perturbed over the increasing mishaps due to casual smokers, the fire department has suggested that owners of the commercial buildings develop separate smoking zones on their premises to reduce such mishaps, Assistant District Fire Officer K. Vijay Kumar said.

    Occupants should not dump cartons, waste papers and other flammable substances either in balconies or cellars, he advised. The department usually establishes the exact reasons for the mishap only after examining the premises and assessing the intensity of the blaze, Kumar added.

  • Malaysia to stamp out smuggled-cigarette smokers

    The city hall in the Malaysian city of Kota Kinabalu, proposed that buyers of  contraband cigarettes be penalized along with the sellers of the smuggled smokes, according to a story in the the Borneo Post.

    Mayor Datuk Abidin Madingkir, who made the proposal in his speech during the  launch of Ops Pacak 2013, said buyers of contraband  cigarettes have never been implicated by the relevant authorities in the effort  to stamp out the smuggling and sale of contraband items, including cigarettes,  in Sabah.

    “All this while, we have only compounded or sentenced to imprisonment the  smugglers and contraband peddlers. We never penalized the customers. Hence, it  is time for us to think of imposing strict penalties on the buyers,” he  said.

    Abidin said that for a start, buyers caught with these contraband items  should be given warnings or reminders that their action of buying such illegal  items will not be without incrimination.

    “The aim of this is to remind them not to become contributors to the flooding  presence of illegal cigarettes in the local market,” he said.

    Abidin also spoke on the city’s role as a tourist location and how the  presence of illegal cigarette peddlers was an eyesore.

    “On the part of DBKK (City Hall), we have often received complaints from the  public about the sales of contrabands within the city. We only have a limited  number of enforcers and are ill-equipped to handle the threat posed by certain  peddlers and cigarette smugglers,” he said.

  • Hungary moves from open market to monopoly to zeropoly

    Smokers in some Hungarian villages will not have local access to cigarettes after a new law allowing only state-licensed tobacconists to sell cigarettes comes into effect in May, according to an MTI-EcoNews story quoting the opposition Socialist lawmaker, Csaba Toth.

    As was reported here on April 3, the country’s parliament adopted legislation in September last year for the establishment of a state monopoly of the retail sale of tobacco products on July 1, 2013.

    The National Tobacco Trade Non-profit, which is overseeing the establishment of the monopoly, said that 15,633 applications for the retail sale of tobacco had been submitted by the February 22 deadline stipulated in the initial tender.

    No applications were submitted in the case of 1,417 villages, however; so new tenders have been invited.

    But since the winners of the new round of tenders would be announced only on April 23, said Toth, there would not be enough time for the shops to open on May 1, the deadline after which only licensed tobacconists may sell cigarettes.

    This would encourage black market trading and result in a drop in excise tax revenues, he added.

  • FBI sting smokes out fake Marlboro men

    For more than a year, the system worked flawlessly. Containers of counterfeit cigarettes shipped from China to the ports of Newark, N.J., and New York City moved easily through customs and the U.S. Department of Homeland Security without inspection.

    From the docks, the cigarettes, falsely labeled as Marlboros and Marlboro Lights, made their way to a nondescript warehouse in South Jersey, where they were readied for the final leg of their trip, the sunny skies of California. The transport crew, responsible for smoothing the way through Homeland Security and making sure the cigarettes – nearly 2.3 million packs – got to California safely was none other than the FBI, accordibng to as story in The Philadelphia Inquirer.

    The elaborate logistics operation was part of a sting to stem the flow of contraband cigarettes into the United States, according to court documents filed this week in U.S. District Court in Camden.

    FBI undercover agents were paid “handling fees” of as much as $55,000 per shipment to deliver the cigarettes to four men in California. Three of the men were indicted in the case. The fourth was named in an earlier complaint but not in the indictment.

    The fake Marlboros typically sell for half-price on the street. A bargain, perhaps, for smokers, but not for the State of California, said V. Grady O’Malley, the assistant U.S. attorney handling the case, because it lost 87 cents a pack in taxes, or about $2 million, according to legal documents.

    “Were the defendants New Jersey residents and we arrested [them] here, the New Jersey tax loss would have been over $4 million,” O’Malley said. Cigarette taxes in New Jersey are about $2 a pack, he said.