Ireland: Cigarette Manufacturer PJ Carroll Profits Jump 40% Despite Black Market Concerns

Source from:  Irish Examiner 11/26/2015

Operating profits at the Irish arm of cigarette manufacturer, PJ Carroll last year rose 40% to €10.7m in the face of continuing competition from the black market.

New figures show that the company's profits increased almost €4m "as a result of management of costs and overheads".

Net revenues also stabilised for the first time slipping marginally from €31.33m to €31.32m after "numerous years of decline".

The firm's gross revenues including duty excise and other taxes of €189.62m fell 6% from €234.82m to €220.94 in the 12 months to the end of December last.

The firm is a subsidiary of the UK-based British American Tobacco.

It recorded pre-tax profits of €10m after incurring finance costs of €662,000.

Within the accounts, the company's directors state: "The company has been through numerous years of decline which was primarily by volume reductions as a result of market contraction in the legitimate market".

They said "the black market remains a huge challenge facing the business. PJ Carroll commends the gardaí and Revenue Commissioners for their continuing efforts in fighting the black market.

"Over the course of 2014, it appears that the black market may have been declining.

"However, it is too early to tell if this trend will continue after the latest excise increase of 40c introduced in Budget 2015," they said.

The directors said that disposable income continues to remain constrained due to tough economic conditions.

"The net effect has been an accelerated decline in legitimate cigarette sales, growth in roll-your-own volumes and an ongoing trend of consumers turning to the black market for their tobacco products."

Another risk and uncertainty facing the firm are product liability cases with two product liability claims against the firm at the end of last year, down from 15 at the end of 2012.

The note states the vast majority of the claims have been terminated through the dismissal of cases by the courts or through the plaintiffs choosing to discontinue their claims.

Regarding the two cases facing the firm, the directors' note states: "If, despite the defence available to PJ Carroll & Co Ltd, there were to be adverse final judgements, such developments could materially affect the results of the operations or cashflow of the group.

It said that the company will defend all claims vigorously and has a right of appeal to any adverse judgment. Enditem