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Poland to file complaint over TPD

| July 21, 2014

The Polish government has decided to file a complaint with the Court of Justice of the European Union against the EU’s new Tobacco Products Directive (TPD), according to a Polish News Bulletin story.

The new TPD entered into force on May 20 and member states are required to bring into force by May 20, 2016, the laws, regulations and administrative provisions necessary to comply with the directive.

The complaint is due to be filed under Article 263 of the Treaty, which covers the functioning of the EU.

It will be based on both legal and economic arguments.

Poland will object to the proposed ban on the sale of menthol cigarettes, due to come into force in 2020, on the grounds that this type of cigarette has been on the Polish market since 1953 and could be regarded as a traditional product.

Poland is one of the biggest consumers of menthol cigarettes, which account for more than 20 per cent of the local market.

Menthol cigarettes are said to be manufactured in six factories in Poland, with 70 per cent of the output exported, 50 per cent to the EU, which implies that outlawing the sale of such products would have serious consequences for Poland’s economy.

Reynolds to appeal against $23.6 billion punitive damages award in ‘Engle’ case

| July 21, 2014

R.J. Reynolds Tobacco was hit on Friday with $23.6 billion in punitive damages by a Florida state court jury, one of the largest such awards in US corporate and legal history, according to a story by Richard Craver for the Winston-Salem Journal.

A jury in Escambia   Court had determined the previous day that the widow of Michael Johnson Sr, Cynthia Robinson, should receive $17 million in compensatory damages in the ‘Engle’ case, even though the jury determined Johnson was 30 per cent responsible for his own illness.

Engle cases have been heard since a Florida Supreme Court decision in 2006 decertified a $145 billion class-action lawsuit filed by Howard Engle but allowed former class members to file individual lawsuits stating that cigarettes caused their respective illnesses. One hundred and eighteen Engle cases have been heard; about 8,000 cases are pending.

‘We hope this verdict will send a message to R.J. Reynolds and other big tobacco companies that will force them to stop putting the lives of innocent people in jeopardy,’ plaintiff attorney Willie Gary said in a statement on Friday.

But Jeffery Raborn, assistant general counsel for R.J. Reynolds, said in a statement on Saturday that the damages awarded in the case were ‘grossly excessive and impermissible under state and constitutional law’. ‘This verdict goes far beyond the realm of reasonableness and fairness, and is completely inconsistent with the evidence presented,’ he said.

‘We plan to file post trial motions with the trial court promptly, and are confident that the court will follow the law and not allow this runaway verdict to stand.’

Meanwhile, Susannah Nesmith, writing for Bloomberg News, said the US Supreme Court had ruled in 2003 that punitive damages usually should be no more than nine times actual damages. However, the court had allowed exceptions for especially egregious conduct, she said, and judges had upheld some punitive awards above the 9-to-1 ratio.

Chinese activist asks court for Yuan250

| July 21, 2014

Li Enze, who is suing a Chinese tobacco manufacturer and a Beijing supermarket for Yuan250, has vowed to fight on despite having lost on Friday the second round of his battle, according to a story by Zhuang Pinghui for the South China Morning Post.

Li is suing China Tobacco Jiangxi Industrial and a Beijing supermarket that sold him a 10-pack carton of Jinsheng cigarettes in March last year.

He is seeking Yuan250, or about twice the price of the carton; arguing that a claim that the low-tar cigarettes with Chinese herbs were a safer option than were regular cigarettes amounted to false advertising.

After losing his initial case, Li filed an appeal to a Beijing court. But on Friday the Beijing court upheld the lower court’s ruling.

Li said that he would not give up: that he would apply to the Beijing High Court and, if necessary, the Supreme Court.

But even getting the initial case heard was said to have been unprecedented. It was the first time a claim against a tobacco company had been accepted by a mainland court. All previous attempts had failed.

“I was told the case was accepted as a usual commercial fraud case,” Li was quoted as saying. “It was too late by the time they realized it was a case for tobacco control. I was told it might not be easy to get such a lawsuit accepted by a court in Beijing again.”

Li is also suing the State Tobacco Monopoly Administration for failing satisfactorily to release information about its tobacco-control efforts over the past 10 years. The case was rejected by the Beijing No 1 Intermediate People’s Court last year, but the Beijing Higher People’s Court ruled it should be heard.

Personal tobacco import levels to be cut

| July 21, 2014

The French Senate on Thursday voted to lower the quantity of tobacco that an individual can be in possession of when entering France from another EU country, making the amount equal to that prescribed in the EU directive, according to a story in Le Figaro.

The new rules are due to come into force after a vote on the second reading.

Assuming they do come into force, the individual limits will be for 800 cigarettes, 400 cigarillos, 200 cigars, or 1 kg of tobacco.

Currently, the limits are for 2,000 cigarettes, 1,000 cigars or cigarillos, and 2 kg of tobacco.

Lorillard to release second quarter results

| July 21, 2014

Lorillard said on Friday that it would release its second quarter 2014 results on July 30, before the market opened.

A news release would be made available under the Investor Relations section of Lorillard’s website at www.lorillard.com.

PMI’s second-quarter cigarette volume increased by 2.4 per cent in EU

| July 18, 2014

Philip Morris International’s cigarette shipment volume during the second quarter to the end of June, at 222,801 million, was down by 2.7 per cent on that of the second quarter of 2013, 228,899 million.

Volume was increased in the EU by 2.4 per cent to 49,913 million, but down in the rest of the company’s regions: by 1.0 per cent to 23,065 million in Latin America & Canada (LAC); by 2.8 per cent to 74,170 million in Eastern Europe, Middle East & Africa (EEMEA); and by 6.1 per cent to 75,653 million in Asia.

PMI’s solid performance in the EU was said to have been driven by sales in Germany, Italy and the UK, partly offset by those in France, Greece and Hungary.

Total cigarette shipments of Marlboro were up by 1.0 per cent to 73.2 billion, while those of L&M fell by 3.5 per cent to 24.2 billion. Cigarette shipments of Bond Street decreased by 4.0 per cent to 11.1 billion; those of Philip Morris decreased by 11.1 per cent to 7.8 billion; those of Parliament increased by 7.6 per cent to 12.4 billion; those of Chesterfield increased by 33.2 per cent to 11.8 billion; and those of Lark decreased by 13.1 per cent to 6.9 billion.

PMI’s shipment volume of Other Tobacco Products (OTP), in cigarette equivalent units, increased by 4.2 per cent, while shipment volume for cigarettes and OTP in cigarette equivalents decreased by 2.4 per cent.

Reported diluted earnings per share during the second quarter, at $1.17, were down by 10.0 per cent on those of the second quarter of 2013, while adjusted diluted earnings per share, at $1.41, were up by 8.5 per cent.

Reported net revenues, excluding excise taxes, were down by 1.5 per cent to $7.8 billion and reported operating income was down by 13.9 per cent to $2.9 billion.

“As we expected, we achieved strong fundamental results in the second quarter, driven by a lower volume decline, strong pricing and robust market share,” said CEO André Calantzopoulos.

“For the second half of this year, we anticipate more challenging quarterly comparisons, particularly in the fourth quarter – which, in 2013, saw currency-neutral adjusted diluted earnings per share grow by 19.4 per cent – due to known business challenges, particularly in Asia, the timing of investments behind the commercialization of our Reduced-Risk Products and the roll-out of Marlboro Red 2.0, as well as costs related to our manufacturing footprint optimization initiatives.

“We are today reaffirming our 2014 full-year reported diluted EPS guidance. As previously communicated, down-trading and heavy price discounting at the low end of the market in Australia, in combination with the impact of plain packaging, could place us at the lower end of our guidance for currency-neutral adjusted diluted EPS growth of six per cent-eight per cent for the full year.”

Meanwhile, PMI’s cigarette volume shipments during the six months to the end of June, at 418,762 million, were down by 3.5 per cent on those of the first six months of 2013, 433,846 million.

Shipments were down in all of the company’s regions: by 0.1 per cent to 91,618 million in the EU; by 2.8 per cent to 44,514 million in LAC; by 4.4 per cent to 146,454 million in Asia; and by 4.9 per cent to 136,176 million in the EEMEA.

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