Cigarette group Gallaher says bottom line half year profits have fallen by 14%, but adds it has increased its share of the UK market.
The Weybridge, Surrey-based company said pre-tax profits in the six months to June 30 dropped to £162 million.
Gallaher, which makes Benson & Hedges and Silk Cut cigarettes, said the drop reflected a £38 million bill for a shake-up in the first half including 430 job cuts in the UK.
But it said its increasing share of the growing low price UK cigarette sector and its strong lead in the premium sector led to growth in total UK market share to 38.3% from 37.7% previously. It added group trading remained in line with expectations for the full year.
Gallaher said in May that it planned to cut 430 jobs as part of an overhaul of its European operations largely affecting its activities in Eire and Northern Ireland.
The group will shut its factory in Dublin, with the loss of 121 jobs, while another 175 posts will go over two years at Lisnafillan, Northern Ireland. A further 85 workers in Austria are set to lose their jobs as part of the restructuring, with the remainder of the cuts being spread across the group.
Today, Gallaher said it expected the cuts to save it at least £15 million. It said pre-tax profits before goodwill and the one-off charge were £241 million, up from £225 million beforehand.
The group said the marginal improvement in UK cigarette market share came as turnover from its UK operations declined 6.3% to £1.7 billion. Gallaher blamed the fall largely on lower cigarette volume sales and downtrading by smokers to cheaper cigarettes.
It said its continental European business delivered a strong underlying performance, growing turnover 14.7% to £2.2 billion, on the back of a stronger euro. The group gained market share in key EU countries including France, Spain and Italy and across the former Soviet Union.
The group's earnings before interest, tax and goodwill grew 29.5% to £25 million due partly to good volume growth in Asia Pacific and elsewhere. Shareholders will receive an interim dividend of 9.45p, up from 8.8p last time.