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ALTADIS STILL A BILLION-SELLER IN CIGARS

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Los Angeles, April 30 – Imperial Tobacco acquired Altadis, S.A. last year because the company sells a lot of cigarettes. It also sells a lot of cigars, in fact more than any other company in the world.

Its unquestioned leadership in cigardom was confirmed by Imperial’s release of the full-year results for Altadis for 2007, which showed that the company’s total cigar sales reached $1.31 billion U.S. (converted from Euro). That’s a lot of sticks; the highlights:

Total sales volume was down 4 percent from 2006 at 3.165 billion cigars, still an excellent figure.

After a difficult first quarter for Altadis U.S.A., total sales revenue for cigars company-wide rose 2 percent in local currency, but poor exchange rates with the Euro saw annual sales revenue dip by 5 percent to 842 million Euro ($1.31 billion U.S.).

Earnings in the cigar sector were also down, by 7 percent when expressed in Euro at 262 million ($408.4 million U.S.), but in local currencies were actually up 1 percent for the year. The 31.0 percent profit margin on cigars was still impressive.

In the premium sector, including handmade and Cuban cigars (Altadis is the half-owner of the Habanos, S.A. distribution firm), sales in local currencies were up 6 percent, but the conversion from the weak dollar showed a final sales total of 229 million Euro ($356.82 million U.S.). That’s 27.2% of the revenue total.

A total of 185 million cigars in this segment were sold, an impressive increase of 5 percent over 2007. That’s a solid showing after a difficult first quarter for Altadis U.S.A. and Havana cigar sales were up by 6 percent over the course of the year. However, please note that this is a modest 5.9 percent of all the cigars sold by Altadis (but worth more than a quarter of the cigar division revenue!).

Machine-made cigars with natural leaf wrappers – Backwoods and Dutch Masters are the best examples – actually rose 6 percent if the impact of the weak dollar is eliminated. After conversion to Euro, sales were flat at 371 million Euro or $578.0 million U.S.; about 44.1 percent.

Sales of these cigars also increased in 2007, primarily in the U.S. market to 1.59 billion sticks or 50.2 percent of all cigars sold by Altadis.

Mass-market cigars and little cigars accounted for 152 million Euro ($236.77 million U.S.) or 18.1 percent. This was down considerably from 2007, off 19 percent as expressed in Euro and down 12 percent when the weakness of the dollar was taken into consideration.

Here is where Altadis saw a steep decline in its sales in 2007: down 12 percent from 2006 to “just” 1.39 billion cigars or 43.9 percent of the unit volume total. It had been 47.9 percent in 2006.

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“Cellophane sleeves on cigars were introduced into wide use only in the 1940s.