British owned tobacco group Gallaher said today the ban on smoking in workplaces has lowered sales of its leading brands by almost 11 per cent in the first ten months of 2004.
The maker of Benson & Hedges and Silk Cut said it was too early to assess the longer-term impact of the smoking ban as monthly volumes are fluctuating, but market volumes fell 10.7 per cent in the first 10 months.
In a trading update published today, Gallaher confirmed 2004 trading was in line with expectations despite slower second-half cigarette volume growth, while its shares gave up early gains as speculation faded of takeovers in the industry.
Gallaher's worldwide volumes rose 3.9 per cent to 139.3 billion cigarettes in the first 10 months of 2004, the company said. With first-half volumes rising 7.6 per cent it implied second-half volumes showed little growth.
Analysts said they were unlikely to change 2004 pre-tax profit forecasts of around £520 million sterling-£525 million from last year's £501 million after there were few surprises in the trading update before the end of its 2004 financial year.
In Britain, where Gallaher makes nearly half of its profits, the group's market share at 38.6 per cent was virtually unchanged to its first-half's share, but were behind Imperial Tobacco's 44.6 per cent amid a market decline and the move to cheaper brands.
Shares in Gallaher jumped higher after a Spanish newspaper reported Franco-Spanish Altadis was studying a merger with Britain's Imperial Tobacco.
Gallaher shares slid from a morning high of 753-1/2 pence after Altadis denied the report and its shares were up 0.2 per cent at 743-1/2p by mid-session.
Analysts said they were sceptical of any imminent moves in the tobacco world, although Imperial was known to be keen to expand and Altadis had been beaten to many deals in the past.