Rothmans Shares Hit 6-year High (fwd)

[Robert Weissman <rob@essential.org>]

(The Age - Australia) 
        

  Rothmans hot at $145m
  By NIC HOPKINS

  21may98


  SHARES in Rothmans hit a six-year high yesterday after the cigarette
maker unveiled a 53.1 per cent jump in
  annual profit to $145 million. 

  The result, which included an after-tax abnormal gain of $47.7 million,
was achieved on total sales of $2.47 billion.

  The operating result of $99 million, up 2.1 per cent, was above market
forecasts of about $90 million.

  The company declared a final dividend of $1.35 a share, compared with
$1.25 previously, which includes a $1 special
  return because of its "strong cash position" at the year end. Full-year
payout is $1.65 a share, up from $1.50.

  After the announcement, Rothmans shares surged 85c to $11, their highest
level since January 1992. 

  But the biggest winners were the company's top 20 shareholders, which
together control more than 90 per cent of
  the capital, including the UK-based Rothmans Plc, which holds more than
50 per cent.

  Rothmans said its abnormal profit had resulted from increased clearance
of stock ahead of changes to federal
  excise laws last August. 

  But chief executive Gary Krelle said the positive cash flow from the
stock clearance would be offset this financial
  year by a tax liability on the abnormal gain. 

  Underpinning the buoyant result were strong gains in the local market,
where operating profit rose strongly from
  $62.4 million to $107.4 million. 

  Mr Krelle said the growth had been forged on gains in market share by
headline brands Dunhill and Holiday. 

  During the year Rothmans expanded its share of the domestic market,
where it makes the top-selling Winfield
  brand, by 1 per cent to 34 per cent, while total market volumes
decreased by 0.9 per cent.

  Rothmans sits ahead of rival WD&HO Wills on 28 per cent market share and
behind the US-based Phillip Morris
  Group, which has 38 per cent. 

  In Indonesia, where Rothmans has a burgeoning presence, the company
halved losses to $6.4 million. Mr Krelle said
  the company was committed to breaking even in Indonesia "in the
mid-term".

  Much of the improvement was a direct result of the rupiah depreciating
by more than 50 per cent through the year,
  though higher volumes had also been achieved. 

  Rothmans also increased profit in New Zealand and Fiji, but Mr Krelle
said its performance in Papua New Guinea
  was "disappointing". While Mr Krelle said he was "cautiously optimistic" 
about the year ahead, he would not reveal
  anything about the company's marketing strategy, confirming only that
"we have plans in place'.

  However, he all but ruled out introducing new brands as strong
advertising restrictions on the tobacco industry were
  too prohibitive for such a move. 

  Mr Krelle also refused to speculate on the possibility of another price
war in the local cigarette market. Last year's
  price wars severely reduced the company's revenues. 

  Meanwhile, Rothmans said its chairman, John Utz, would retire on July 31
to be replaced by vice-chairman John
  Curtis on August 1. Mr Utz has been with the company for more than 20
years.

         

  © News Limited 1998