 European governments are trying to cut the amount people smoke |
Gallaher, the maker of Silk Cut and Benson & Hedges cigarettes, has called conditions in Europe "challenging" as governments try to stop people smoking. The comments came as the firm reported that pre-tax profit rose 2.2% to �516m during 2005. The total number of cigarettes sold rose 2% to 174 billion.
The company said that it had been offsetting declining European sales by moving into emerging markets.
It highlighted higher taxes and smoking bans as two contribution factors.
"In Europe, the challenging conditions make the tobacco operations' outlook less certain," Gallaher said in a statement. The company blamed "increased taxation, an escalation of cross-border trade, lower UK tourist volumes and workplace smoking bans" for falling sales in Austria, Germany, Italy, Belgium and the Netherlands.
"Management expects that these trends will continue in 2006," the company said.
Gallaher's European cigarette sales declined by 6.1% to 42.5 billion pieces during 2005.
However, the company said it managed to increase sales in the Republic of Ireland, Spain, Russia and Kazakhstan. It also improved earnings in places such as Ukraine, Poland, Romania, the Czech Republic and Hungary.
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