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Japan’s smoking incidence up – or down

| July 30, 2015

Japan’s adult smoking incidence increased slightly between May 2014 and May 2015, according to figures posted on Japan Tobacco Inc.’s website, but the company believes that the incidence is actually falling in line with long-term trends.

JT today announced the latest results of its Japan Smoking Rate Survey, a study that has been carried out annually since 1965.

Smoking among adult men increased by 0.7 of a percentage point to 31.0 percent between May last year and May this year; smoking among adult women fell by 0.2 of a percentage point to 9.6 percent; while smoking among all adults increased by 0.2 percent to 19.9 percent.

The researchers used adult population data from the Statistics Bureau of the Ministry of Internal Affairs and Communications (50.36 million men and 54.40 million women as of April 1, 2004; and 50.38 million men and 54.37 million women as of April 1, 2015) to calculate that the number of adult male smokers had risen between May 2014 and May 2015 from 15.26 million to 15.62 million; that the number of adult female smokers had fallen from 5.33 million to 5.22 million; and that overall the number of adult smokers had risen from 20.59 million to 20.84 million.

Commenting on the figures, JT said that the results of the survey showing an increase in smoking among adult men and, therefore, among the adult population as a whole, were within the margin of statistical error.

The company said it was of the view that the incidence of smoking in Japan had, between May 2014 and May 2015, continued to decline.

The continuing decline was said to be due to various factors, including the aging of Japanese society, the growing awareness about the health risks associated with smoking, the tightening of smoking-related regulations and tax and price hikes.

Iggesund announces packaging design winners

| July 30, 2015

One of the winners was a crisp design.

One of the winners was a crisp design.

Iggesund Paperboard has received almost 200 design proposals in response to the challenge it issued earlier this year to the world’s designers to create better and more sustainable consumer packaging. Three of the designs have been chosen and their creators will receive rewards. In addition, the company has opened dialogues with various of the designers about being able to use their creations in various contexts.

“We’re overwhelmed by the enthusiasm that greeted our project, both from the participating designers but also the attention it has received in the press,” said Staffan Sjöberg, public relations manager at Iggesund Paperboard. “And of course we’re pleased, because one of our aims was to show more designers what they can do with paperboard in general and our products, Invercote and Incada, in particular.”

One of the winning entries is a packaging system for rolls of toilet or kitchen paper submitted by Maikel Roberts, of Barcelona, Spain. “It’s exciting from our perspective as a paperboard manufacturer because it involves an upgrade from plastic wrap to paperboard,” Sjöberg said. “What Maikel has created is a system that allows more to be loaded on every pallet and also gives better exposure at the point of sale. It also probably makes in-store handling easier.”

Jessica Bergdahl, Moa Ahlström, and Linnea Löfgren, first-year students at Nackademin in Stockholm, Sweden, were selected for their tri-function crisps packaging. As packaging, it protects its contents better than a traditional bag does; it can be unfolded so as to function as a serving bowl; and the lid, which is used to close the packaging, can be used to serve dip. “Packaging that can offer several functions during its lifetime is always interesting and I’m convinced that we will see more of this type of thing in the future,” said Bo Wallteg, long-time editor-in-chief of the packaging industry magazine Nord-Emballage, and member of the competition jury.

Alpha Design, of Bulgaria was the third winner for its proposal for a holder and protective cover for e-book readers. “A paperboard cover or holder is inexpensive and also means e-book readers can be supplied with customised contents and a cover that reflects the contents,” said Johan Granås, business developer at Iggesund, who was also a member of the three-person jury. “But even if that option is not used, this should still be a cheaper alternative than many other holders and covers now on the market.”

Iggesund worked with the US crowdsourcing agency Crowdspring, whose global network of designers formed the basis of the competition.

“We hoped to see some local variations where we could distinguish differences between countries and parts of the world,” said Sjöberg. “But we lucked out there – the vast majority of the entries were makeovers of products from global brands.”

BAT’s first-half volume down but share up

| July 29, 2015

British American Tobacco’s cigarette volume during the six months to the end of June, at 322 billion, was down by 2.9 percent from that of the six months to the end of June 2014.

The company estimated that the industry-wide volume decline during this period was 3.5 percent and that it had enjoyed a ‘significant increase in market share’.

Volume, at 52 billion, was stable in the company’s Western Europe region, but down in each of its other regions: in its Asia Pacific region by about 1.0 percent to 103 billion; in its EEMEA (Eastern Europe, the Middle East and Africa) region by about 4.5 percent to 107 billion; and in its Americas region by about 4.8 percent to 60 billion.

BAT’s total tobacco volume, which includes other tobacco products converted as cigarette equivalents, was down from 344 billion during the six months to the end of June 2014 to 334 billion during the six months to the end of June 2015.

The company reported that its global drive brands volume was increased by 6.0 percent and that their share had continued to grow strongly. Dunhill’s volume increased by 2.4 percent with growth driven mainly in Indonesia and Brazil, partially offset by lower volumes in South Korea, Malaysia and Gulf Co-operation Council countries. Kent’s volume was down by 0.9 per cent as good growth in Iran and Turkey was more than offset by market contraction in Russia, Ukraine and Romania.

Lucky Strike’s volume was increased by 2.9 percent driven by growth in Belgium, Mexico and France that offset lower volumes in Russia and Italy. Pall Mall’s volume grew by 2.8 percent with strong performances in Pakistan, Poland, Mexico and Canada more than offsetting lower volumes in Italy, Russia and Australia.

And Rothmans’ volume grew by 36.6 percent, with strong performances in Russia, Australia, Turkey, Kazakhstan, Italy and Ukraine.

The volume of other international brands declined by 6.1 percent as growth in State Express 555 and Shuang Xi were more than offset by volume declines in respect of Craven A, Peter Stuyvesant and Viceroy caused by market declines in their strongholds.

BAT’s revenue, calculated at constant rates of exchange during the six months to the end of June, at £6,962 million, was up by 2.4 percent on that of the six months to the end of June 2014. It was down by 5.9 percent to £6,398 million at current rates.

Adjusted profit from operations was up by 1.3 percent to £2,699 million at constant rates of exchange, but down by 6.0 percent to £2,507 million at current rates.

Profit from operations was increased by 3.0 percent to £2,533 million at constant rates of exchange, but down by 4.6 percent to £2,347 million at current rates.

Adjusted diluted earnings per share were increased by 3.9 percent to 105.8p at constant rates of exchange, but 1.6 percent lower to 100.2p at current rates.

Basic earnings per share were up by 52.6 percent to 142.4p.

In announcing the half-year results, CEO, Nicandro Durante, said that the business had performed well despite a strong volume comparator and the intensified low price competition in Australia. But he added that adverse foreign exchange rate movements had significantly impacted the company’s results.

“Cigarette volume was down 2.9 percent although the consistent growth of GDB volume, higher by 6.0 percent, demonstrates that our strategy continues to deliver,” he said in part. “Underlying volume, excluding one-offs, was down by approximately 2.5 percent. This is against an industry decline of around 3.5 percent following significant excise driven price increases in Russia, Australia and South Korea.

“Our market share, an important indicator of the underlying strength of our business, grew strongly with corporate share up 40 basis points in the Key Markets and the Global Drive Brands continuing to perform excellently with share up 80 basis points. Pricing in general continued to be strong, with price/mix ahead of last year.”

RAI’s Newport-boosted 2Q volume up by 4.4 percent

| July 29, 2015

R.J Reynolds Tobacco’s domestic cigarette volume during the three months to the end of June, at 16.3 billion, was increased by 4.4 percent on that of the three months to the end of June 2014, 15.6 billion.

Camel volume was increased by 3.5 percent to 5.4 billion, Pall Mall volume was down by 2.2 percent to 5.2 billion, and other-brand cigarette volume was down by 16.3 percent to 4.3 billion.

The three months’ figures included a 1.4 billion contribution from Newport, which Reynolds acquired when it completed its acquisition of Lorillard on June 12, but excludes the divested brands Winston, KOOL and Salem.

Reynolds’ share of the domestic retail cigarette market during the three months to the end of June, at 31.8 percent, was down by 0.1 of a percentage point from that during the three months to the end of June 2014.

Newport’s share was increased by 0.4 of a percentage point to 13.2 percent, Camel’s share was increased by 0.1 of a percentage point to 8.2 percent, Pall Mall’s share was down by 0.3 of a percentage point to 7.8 percent, and other-brands’ share was down by 0.3 of a percentage point to 2.6 percent.

Santa Fe’s cigarette (comprising the Natural American Spirit brand) volume during the three months to the end of June, at 1.3 billion, was up by 25.1 percent on that of the three months to the end of June 2014.

At the same time, Natural American Spirit’s share of the retail market increased by 0.3 of a percentage point to 1.8 percent.

American Snuff’s moist snuff volume during the three months to the end of June, at 128.5 million cans, was increased by 6.0 percent on that of the three months to the end of June 2013.

Grizzly volume was increased by 7.1 percent to 117.2 million cans, while other-brands volume was down by 4.1 percent to 11.3 million cans.

At the same time, American’s share of the moist-snuff retail market rose by 1.1 percentage points to 33.8 percent. Grizzly’s share was up by 1.3 percentage points to 31.1 percent, while the share of the company’s other moist snuff brands fell by 0.2 of a percentage point to 2.8 percent.

Reynolds American Inc yesterday announced its second quarter and half year 2015 results.

Net sales for the three months to the end of June, at $2,403 million, were increased by 11.1 per cent from that of the three months to the end of June 2013.

Reported operating income was up by 422.0 percent to $4,364 million and adjusted operating income was increased by 25.1 percent to $1,011 million.

Reported net income was up by 291.9 percent to $1,928 million and adjusted net income was up by 22.2 percent to $579 million.

Reported net income per diluted share was up by 267.4 percent to $3.38 and adjusted net income per diluted share was up by 14.6 percent to $1.02.

“Reynolds American delivered excellent results in the second quarter, in addition to successfully completing the Lorillard acquisition and related divestiture,” said Susan M. Cameron, president and CEO of RAI.

“The strength of our operating companies and their growth brands continued to benefit RAI’s earnings and operating margin through the first half, and the integration of the powerful Newport menthol brand into R.J. Reynolds Tobacco Company’s cigarette portfolio is going very smoothly.”

Meanwhile, Reynolds’ domestic cigarette volume during the six months to the end of June, at 30.2 billion, was 1.1 percent up on that of the six months to the end of June 2014.

Santa Fe’s cigarette (Natural American Spirit) volume during the six months to the end of June, at 2.3 billion, was up by 24.3 percent on that of the six months to the end of June 2014.

And American’s moist snuff volume during the six month to the end of June, at 246.0 million cans, was up by 3.3 percent on that of the six months to the end of June 2014.

Andhra sales picking up but volume, prices still down

| July 29, 2015

After a slow start, flue-cured auctions in the Indian state of Andhra Pradesh are proceeding ‘at a satisfactory pace’, according to a story by Ch. R.S.Sarma for Business Line, citing the Tobacco Board of India chairman, K. Gopal.

In a story relayed by the TMA, Gopal was quoted as having told media representatives that the Union Commerce and Industry Minister Nirmala Sitharaman had directed tobacco buyers to purchase leaf in accordance with the agreements they had reached with the board.

Although sales have picked up, volumes are still behind those of last year and grower prices are down, too.

Growers were said to have sold 76.48 million kg of leaf at an average price of Rs106.28 (US$ 1.66) per kg as of July 25, down from 138.36 million kg at an average price of Rs119.57 (US$ 1.87) per kg during the corresponding period of last year.

The board has reduced the Andhra crop size from 172 million kg for the 2014-15 season to 120 million kg for the 2015-16 season to reflect current market conditions, including the slump in demand from overseas.

Gopal is currently leading a delegation to China to promote Indian tobacco.

Vector to webcast 2Q results conference call

| July 29, 2015

The Vector Group is due to conduct a conference call and webcast to discuss its second quarter 2015 results from 09.00 Eastern Time on July 30.

Investors can access the call by dialing 800-859-8150 and entering 24708438 as the conference ID number; or by registering at www.investorcalendar.com.

A replay of the call will be available shortly after the call ends through August 30 at 877-656-8905; ID number 24708438.

The archived webcast will be available at www.investorcalendar.com for one year.

Vector Group is a holding company that indirectly owns Liggett Group LLC, Vector Tobacco Inc. and Zoom E-Cigs LLC, and directly owns New Valley LLC, which owns a controlling interest in Douglas Elliman Realty, LLC.

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