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Smuggling back: CEO: Magnitude of profit decline surprises analysts
Jump to full article: National Post (ca), 2003-02-21
Author: Steve Maich / Financial Post
Intro: The bad old days of cigarette smuggling and steep tobacco taxes are back in Canada, and they are taking a heavy toll on the earnings of Rothmans Inc., the tobacco company said yesterday.
In June, the Canadian government and several provinces hiked taxes on tobacco by as much as $5 a carton in an effort to further reduce the number of people taking up smoking.
The result, according to Rothmans and others in the industry, has been a steady shift of customers to lower-cost brands and a resurgence in the cross-border smuggling that ran rampant in the early 1990s.
The Canadian maker of brands such as Benson & Hedges and Craven A cigarettes reported that fiscal third-quarter profit dropped to $21.1-million, or 63 a share, from $24.6-million (74) in the same period a year ago.
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