Rothmans faults taxes in profit drop
TORONTO -- Rothmans Inc. reported a stale quarterly profit of $29.3 million yesterday as robust tobacco smuggling and the cigarette industry's continuing decay dragged on revenue.
To stoke sales, it is launching a new cigarette brand distinguished by having no brand name on its package. The so-called rooftop pack, topped with a red and white design resembling a roof peak and reminiscent of American Marlboro packaging, contains U.S.-style blended tobacco.
In delivering the quarterly results, Rothmans president and chief executive John Barnett attacked "high taxes and lack of enforcement" against contraband.
He told the annual meeting of shareholders, who reap a dividend yield of about six per cent, that legal tobacco sales volumes have been waning for more than 20 years but the decline is accelerating -- to 9.8 per cent in the past year -- because of the illegal tobacco trade provoked by heavy taxes.
"It's time for governments to step up and acknowledge the problem and begin to work toward a solution," he told shareholders.
He added later in a conference call with analysts that a "workable and forcible solution" is needed.
"Dealing in contraband is a criminal activity which results in a significant economic loss to all levels of government," he said.
The $29.3 million in net income for Rothmans' first quarter ended June 30 was worth 43 cents a share, off from $29.7 million, or 44 cents a share, a year earlier.
