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Iggesund expands services for Eastern Europe

| June 10, 2015

Iggesund Paperboard—Europe’s third-largest manufacturer of high-quality virgin fiber paperboard—is expanding its services for Eastern Europe by establishing a new freight terminal in Riga, Latvia, as well as a sales office in Moscow, Russia, to boost Russian sales. Construction of the two new facilities is part of Iggesund’s long-term plan to cultivate its delivery services on a global scale.

“We need to be near the customer both in terms of deliveries and other services required by today’s customers,” says Rikard Papp, director Asia Pacific & Merchants Europe at Iggesund.

Iggesund will also take part for the second time in the RosUpack exhibition, which will be held June 16-19 in Moscow.

“The intense interest we met with last year convinced us that we should establish a sales office for the Russian market. It is a major market that definitely has room for a high-end product like [our flagship product] Invercote,” says Papp.

Iggesund Paperboard’s terminal in Riga became operation in April, and the sales office in Moscow will be inaugurated in July.




AOI’s volume, sales impacted by global oversupply

| June 10, 2015

Alliance One International’s CEO and president, Pieter Sikkel, said on Monday that the company’s fiscal year 2015 volume and sales were impacted by global oversupply as a result of customers modifying their inventory positions in response to reduced consumer demand in some markets during the past 36 months.

Global oversupply appeared now to be moving back towards equilibrium with reduced crop sizes planned and market pricing to suppliers that reflected the oversupply imbalance.

Later in his presentation of the company’s fourth-quarter and full-year results, Sikkel said it would likely take another crop cycle to achieve equilibrium or undersupply in certain qualities, though the market had begun to tighten in certain origins. “We will continue to monitor our customers’ requirements as we further strengthen our operations, improve our global footprint and move further up the supply chain to meet our customers’ evolving sourcing parameters and simplification strategies,” he said.

“Partial vertical integration strategies by some manufactures are beginning to reverse as the efficiency benefits and costs savings of further leveraging compliant leaf merchants’ capabilities are presenting opportunities for growth.

“We will continue to focus on enhancing best agricultural practices globally and further improving sustainability programs essential to our company and customers.”

Sikkel said he was “really pleased” with the performance the company’s global team had achieved through fiscal year 2015 under challenging trading conditions.

“Important to full year results, our fourth quarter sales improved 19.9 percent to $738.1 million versus last year and was the second best quarter in the company’s history,” he said.

“Adjusted EBITDA improved 188.5 percent to $59.3 million or 8.0 percent of sales.

“For the year, sales decreased 12.3 percent to $2,065.9 million, while adjusted EBITDA improved 9.8 percent to $173.2 million and was 8.4 percent of sales with improved total debt less cash divided by adjusted EBITDA of 5.36x.”

Sikkel reported that phase one of Alliance’s restructuring and efficiency improvement program that was started in March was on track to deliver between $30.0 million and $35.0 million of recurring annualized savings with 75.0 percent to 80.0 percent of the actions targeted enacted by the end of September 2015.

“In addition to reducing our cost structure, we plan to further optimize our global footprint including rationalizing certain markets that are neither meeting internal performance expectations nor part of our customers’ future planning, while improving core markets where we have invested,” he said.

“Our internal forecasts anticipate improved sales and adjusted EBITDA for next fiscal year compared to fiscal 2015, and consistent with trends over the last several years, we are forecasting increased sales and profit levels in the second half of fiscal year 2016 versus the first half of the year.

“Additionally, following four years of significant investment in our operations, we are targeting approximately $19.7 million of capital expenditures in fiscal year 2016, principally for maintenance purposes.”

Leaf tobacco prices fall as growing costs rise

| June 10, 2015

Flue-cured tobacco growers operating in the Indian state of Andhra Pradesh are urging the union government to address immediately their concerns about a steep fall in sales this year, according to a story in the latest issue of the BBM Bommidala Group newsletter.

The growers are said to be faced with making losses this year because of a ‘slowdown’ in the state’s tobacco auctions.

They said that while the manufacturers and exporters were claiming the slowdown had been caused by a global oversupply of leaf, the current predicament was down to the government and its policies.

The growers argue that since flue-cured tobacco is a regulated crop and the crop size set by the Tobacco Board according to trade assessments, the total harvest should be bought.

They say also that flue-cured tobacco prices have fallen by between 20 percent and 30 percent during the past three years while production costs have rise by 30 percent.

The problems are not impacting only flue-cured growers, and so farmers from 12 tobacco-growing states in India are preparing to take part in a protest rally in Delhi.

Most people support separate smoking areas in pubs

| June 10, 2015

The smokers’ lobby group, Forest, is urging the UK government to reject the ‘comprehensive package’ of anti-smoking measures published today by the NGO Action on Smoking and Health (ASH).

Forest’s director, Simon Clark, said a tobacco levy – one of many proposals being made – would almost certainly be passed on to consumers and would hit those who could least afford a further increase in the price of tobacco.

“A tobacco levy would probably lead to tobacco becoming even more expensive and would have the same result as raising the duty on tobacco,” he said.

“It will hit the elderly, the low paid and the unemployed hardest, and it will encourage criminals to flood the black market with cheap and sometimes counterfeit tobacco.

“That in turn will hit small convenience stores who will lose vital business.”

In criticising ASH’s five-year tobacco strategy, Smoking Still Kills, Forest said the government had gone far enough in its anti-smoking policies.

It said that a poll carried out on its behalf by Populus last week had found no strong desire in Great Britain for a further package of tobacco control measures following those concerning the tobacco display ban and standardized packaging. (Poll details are at:

Tackling smoking was considered to be the lowest in a list of 10 government priorities for the National Health Service, behind obesity and alcohol issues.

The poll found also that a majority of adults opposed bans on smoking in public parks and private vehicles without children.

And in a sign that voters now believe some regulations have gone too far, 57 percent would allow well-ventilated designated smoking rooms in pubs and private members’ clubs.

Significantly, said Clark, 75 percent were opposed to NGOs using taxpayers’ money to lobby government.

“Enough is enough,” said Clark. “Smoking isn’t good for you. We get it. But this is not just about health. Tobacco is a legal product and government must take into account other factors such as choice, personal responsibility and, dare I say it, pleasure.”

Altria to host investor-day webcast

| June 10, 2015

The Altria Group is due to host a webcast of its Investor Day in New York, N.Y, on June 23.

The presentation, which will be in listen-only mode, will begin about 09:00 Eastern Time and end about 12:00.

The webcast will feature presentations by Marty Barrington, Altria’s chairman, CEO and president, and other members of the company’s senior management team.

Directions for the required pre-event registration are at

An archived copy of the webcast will be available on or through the Altria Investor App. The free app is available for download at or through the Apple App Store or Google Play.

RAI to complete Lorillard acquisition on Friday

| June 9, 2015

Reynolds American (RAI) is expected to complete its acquisition of Lorillard on Friday. At the same time, Imperial Tobacco’s ITG Brands will acquire from RAI and Lorillard operating companies the KOOL, Salem, Winston and Maverick cigarette brands, and the blu eCigs electronic cigarette brand, along with other assets.

In a note posted on both the RAI and Lorillard websites, the two companies announced yesterday the completion of the acquisition’s ‘final significant condition’.

‘The federal district court overseeing a remedial order in relation to a lawsuit brought by the U.S. Department of Justice against subsidiaries of RAI and Lorillard, along with other companies, has approved the sale of certain cigarette brands and businesses to Imperial Tobacco’s ITG Brands, LLC subsidiary,’ the note said.

The approval came when Federal Judge Gladys Kessler ruled that the public corrective statements that RAI and Lorillard are required to make under the terms of her ruling in 2006 in relation to a 1999 Racketeer Influenced and Corrupt Organizations case would continue to apply as originally intended and that the public interest would not be harmed by granting the unopposed motion.

RAI and Lorillard said they expected to complete the acquisition and the related transactions on June 12, ‘subject to the satisfaction of remaining closing conditions’.

“We are very pleased to be able to proceed with this transformative acquisition,” said Susan M. Cameron, RAI’s president and CEO. “With the addition of Lorillard’s strong Newport brand, RAI’s operating companies will have brand portfolios that reflect diversification and strength across product categories and across geographies.”

Cameron said that she expects the transaction to provide RAI with additional resources to invest in innovation, R&D and its operating companies’ brands. “Investing in innovation will benefit adult tobacco consumers and wholesale and retail customers alike,” she said.

It is projected that, following the transactions, RAI will earn more than $11 billion in annual revenues and about $5 billion in annual operating income. And its operating companies will have ‘key brands’ across major industry categories: Newport, Camel, Pall Mall and Natural American Spirit in combustible cigarettes; Grizzly in smokeless tobacco; and VUSE in the vapor market.

“This is an important milestone in our ability to deliver value to our shareholders, and benefits to our customers, consumers and employees,” said Murray Kessler, Lorillard’s chairman, president and CEO. “We look forward to continuing to work with Reynolds American and Imperial Tobacco to successfully complete these transactions.”

Kessler will join RAI’s board of directors following the closure of the transactions.

‘As previously disclosed on July 15, 2014, RAI and Lorillard announced an agreement in which RAI agreed to acquire Lorillard in a cash-and-stock transaction,’ the note said. ‘At closing, Lorillard shareholders will receive $50.50 in cash and 0.2909 of a share of RAI stock for each share of Lorillard stock they own.

‘Also on July 15, 2014, RAI and Lorillard announced agreements for their operating companies to sell the KOOL, Salem, Winston, Maverick and blu eCigs brands and other assets and liabilities to a subsidiary of Imperial Tobacco Group, PLC for a total consideration of approximately $7.1 billion in cash.

‘As part of the transactions, British American Tobacco p.l.c. (BAT) will maintain its approximately 42 percent ownership in RAI through an investment of approximately $4.7 billion (based on RAI’s closing share price of $60.16 as of July 2, 2014, the same share price used to determine the stock component of Lorillard shareholders’ consideration).’

Meanwhile, in a note posted on its website yesterday, Imperial said that the US District Court for the District of Columbia had approved the sale of US cigarette brands to ITG Brands in accordance with the DOJ case involving those brands, though it did not name the brands.

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