Despite increases in prices and cost savings, overall pre-tax profits fell by Pounds 1m to Pounds 339.9m, with UK earnings falling 0.4% to Pounds 346m. However, the value of company shares grew steadily throughout the year, being valued at 446p, compared to 246p at the start of 2000.
Chief executive Nigel Northridge told the Daily Mail he blamed the drop in profit on ‘increased penetration of non-duty products’.
To offset this, Gallaher has begun aggressive overseas expansion. It recently invested Pounds 26om in the Russian market and is reported to be looking at opportunities in emerging markets.
An estimated one-in-three cigarettes smoked in the UK are smuggled into the country. Recently, a cigarette pack-marking scheme was introduced by Customs & Excise to reduce cross-Channel smuggling.
The government has also begun tackling the enormous losses in duty by taking tougher actions at ports, with scanners being used to spot professional smugglers and more customs officials being hired.
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