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March, 2010


Alcan Packaging acquisition complete
Melbourne - Australian packaging company, Amcor recently announced the completion of the acquisition of Canadian aluminum producer, Alcan Packaging. According to a release from the company, this acquisition provides Amcor “with leading global positions in the nominated strategic growth markets for flexible packaging and folding carton packaging for tobacco.” We will follow this development closely in future issues of TI.

ITC posts record quarterly profit as tobacco sales rise
Delhi - ITC, Asia’s second-largest tobacco company by market value, posted a record quarterly profit as cigarette sales rose and its paper and agriculture businesses almost doubled earnings. Net income climbed 27% to 11.4 bn rupees ($247 mn) in the three months ended Dec. 31, from 9.03 bn rupees a year earlier, Kolkata-based ITC said in an e-mailed statement.

Cigarette sales rose 17% to 23.3 bn rupees in the third quarter. Profit before taxes and one-time gains increased 15% to 13.1 bn rupees. Making the jump in sales more interesting is the backdrop of India’s government has imposed a nationwide ban on smoking in public places including office buildings, restaurants, and pubs in October 2008.

United Kingdom
New look for Imperial’s West
London - Imperial Tobacco has announced the launch of West cigarettes in a contemporary new pack design which will be rolled out successively in global travel retail in March.

Through the new design, the company said it was making “a conscious effort for innovation and to create something that is both functional and aesthetically pleasing for our adult smokers.”

The pack design is described as the key to the success of West cigarettes, Imperial Tobacco’s biggest international brand in the mainstream segment. West’s new metallic look aims to add “next-generation modernity” to the brand, connecting it with adult smokers who are becoming more and more progressive and selective. West’s repositioned logo and updated typeface are designed to give the brand a contemporary feel, while its dynamic swooshes add to an overall modern, premium look that brings West into the 21st century, the company added.

United States
Altria showing profit with shift towards smokeless
Richmond - Marlboro maker Altria Group Inc. recently released a report stating that cost-cutting and strong sales of smokeless tobacco such as Skoal and Copenhagen led its fourth-quarter profit to climb 7%, even though it sold fewer cigarettes.

Still the Richmond-based owner of Philip Morris USA said it expects 2010 will be challenging as economic pressures, high unemployment and possible state tax hikes could hurt tobacco sales.

The company said it sold 11.4% fewer cigarettes in the fourth quarter than a year earlier. Altria estimated a total industry decline of about 10%. For the year, Altria’s cigarette volume fell 12.2%, compared with 8% industrywide.

For the quarter, revenue grew 29% to $6.01 bn from $4.65 bn on higher prices related mostly to the 62-cent-per-pack federal tax increase that took effect in April 2009, as well as its acquisition of smokeless tobacco company UST LLC.

Excluding the excise taxes Altria collects, its quarterly revenue increased 7%, to $4.1 bn. Wall Street expected revenue of $4.14 bn. Annual revenue overall grew 21.7% to $23.56 bn, but it increased only 5.4% excluding excise taxes.

Altria’s cigarette sales excluding excise taxes decreased 4.7% to $3.5 bn during the fourth quarter. Including taxes, like the new federal tax, the company’s overall revenue was $5.4 bn. In the fourth quarter, Philip Morris USA reported volume declines among all cigarette brands, including Marlboro, Parliament, Virginia Slims, and Basic. Marlboro, the best-selling brand in the US, lost 0.4 point of market share in the quarter to end up with 41.7% of the US market, according to data from Information Resources Inc.

Like other tobacco companies, Altria is focusing on cigarette alternatives - such as cigars, snuff and chewing tobacco - for future sales growth. Altria sold fewer cigars, but its smokeless tobacco volume grew 3.6% during the quarter. For the year, volumes for its smokeless products declined 2.4% and cigar volumes decreased 3.6 percent. Still, both segments gained market share.

The company said it cut expenses $157 mn during the fourth quarter and $398 mn for the full year and expects additional cost savings of about $462 mn by 2011. It closed its Cabarrus County, North Carolina, cigarette factory in July to bring its manufacturing capacity in line with falling demand.

Tobacco International - March, 2010

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