Gallaher signals profits upgrade

GALLAHER today signalled an upgrade in profit forecasts as it reaped the benefits of international expansion.

Chief executive Nigel Northridge, also unveiling a joint venture with China's State-owned tobacco corporation, said: 'We're on track for 2002 but are looking to continue growth in Europe. Now we are increasingly confident about 2003 and 2004 slightly exceeding previous expectations.'

Its big springboard into Europe was made when buying Russia's Liggett-Ducat in 2000 and Austria Tabak last year.

Northridge also had high hopes for developing countries likely to join the European Union, such as the Czech Republic, Hungary, Slovenia and Slovakia, where Benson & Hedges is already being launched. In the UK, Gallaher accelerated its marketing spend ahead of a ban on tobacco advertising, pushing its Benson & Hedges, Silk Cut and Hamlet brands.

Northridge said of the ban, due to start before the end of this year: 'I don't think it will make any difference to overall tobacco consumption. It will just make it more difficult for us to compete with each other.'

Acquisition-fuelled pre-tax profits in the six months to 30 June were £186.5m against £172.7m in the same period a year ago, on sales of £4.22bn against £2.92bn.

Shareholders pick up an interim dividend of 8.8p, against 8.15p a year ago.