Imperial Looks Overseas to Stop Smuggling (fwd)

[Robert Weissman <rob@essential.org>]

The Guardian
Imperial looks overseas to counter smugglings

 Terry Macalister
 Tuesday November 30, 1999

 Imperial Tobacco yesterday promised to
 expand by buying an overseas firm to
 counter what it sees as sky-high cigarette
 tax rates and a smuggling bonanza in
 Britain.

 The chief executive, Gareth Davis,
 reported a 23% increase in pre-tax profits
 driven by booming overseas sales while
 British growth was subdued. He
 welcomed initiatives by the government's
 anti-smuggling chief, Martin Taylor, but
 said the problem would not be eradicated
 until the "huge disparity" in tax rates
 between Britain and Europe was removed.

 As difficulties pile up in the British market,
 Imperial is running the slide rule over half
 a dozen potential takeover targets in an
 effort to expand the foreign profit
 contribution from 39% to 50%.

 There are possible targets in Europe and
 developing markets, including the middle
 east. The only country ruled out is the
 US.

 Imperial, which recently moved into
 Australia, says it is confident about
 overseas growth following the acquisition
 of the Dutch Douwe Egberts Van Nelle
 rolling tobacco business for £676m in July
 last year. It says the integration of Van
 Nelle is underlined by the Dutch firm
 increasing its operating profit by 11% year
 on year.

 Imperial, which makes Embassy, John
 Player and Lambert & Butler cigarettes,
 reported overall pre-tax profits of £400m
 for the year to September 25 on sales up
 12% at £4.49bn. Operating profits came in
 at £436m, up 19% but the UK contribution
 at £330m represented only a 3%
 increase. The UK figures were also
 flattered by "forestalling" whereby tobacco
 companies can raise the price ahead of a
 budget and pay tax at the old rate. A
 dividend of 27.5p, up 18%, was declared
 and the shares ended the day down 1p at
 667p.

 Imperial has no intention of giving up its
 cigarette and cigar manufacturing plants
 in Britain which employ more than 2,000
 people.