Gallaher warns of tough markets
LONDON (Reuters) - Tobacco company Gallaher Group warned that market weakness in Sweden, Poland and Africa were only offset in the first 5 months of 2006 by a strong performance in countries of the former Soviet Union.
Gallaher, whose cigarette brands in Britain include Benson & Hedges, Silk Cut and Mayfair, said its group cigarette volumes rose 4.4 percent in the first five months of the year as it said trading was in line with its expectations.
The firm saw a 6.7 percent rise in its first-quarter.
The world's fifth-largest cigarette group said that due to tough markets in Sweden, Poland and Nigeria and spending on a new plant in Singapore, first-half earnings before interest, tax and amortisation (EBITA) in its rest of the world region will be sharply down on the comparable period in 2005.
It added that trading in its Europe region continued to be challenging especially in Austria and Spain, and first-half EBITA was expected broadly flat although full-year profits in the region are expected to be marginally ahead of 2005.
In the UK, which accounts for nearly half of group profits, Gallaher held its 38.7 percent market share in the first 5 months, similar to the first-quarter, and expected EBITA to be more weighted to the second-half after a May price rise.
Gallaher shares were the top loser in a firmer FTSE 100 index, being off 1.1 percent at 818-1/2 pence by 9:05 a.m.
