Tobacco giants reap monster profits

Cigarettes Pile

The biggest of the three, Philip Morris (Australia) increased its profits last calendar year to $376.7 million, up more than $65 million on the previous year.

Its revenue was more than $908 million. It spent just $51.4 million on raw materials.

Cigarettes Pile

A pile of cigarettes

Imperial Tobacco Australia made $34.2 million, up more than $5 million in the year to the end of September.

Both results outpaced the performance of the Australian share market, which fell 15.2 per cent for the year.

British American Tobacco Australia does not separately disclose its profit figures, but said profit was up in Australia “as a result of cost-saving initiatives, favourable exchange movements and higher pricing, partially offset by additional costs associated with the campaign against plain packaging”.

All three tobacco companies are party to the plain-packaging case, which is seeking to block the Government’s plans to force cigarette makers to uniformly encase their  products in drab  olive green packaging.

The case started in the High Court last week.

The industry is arguing, among other things, that plain packaging will lead to more people smoking, a loss of government excise, and more profits for organised crime.

“There are so many serious consequences involved with plain packaging … the tobacco black market will be flooded with counterfeit cigarettes as they’ll be easier to copy and smuggle into the country,” BAT spokesman Scott McIntyre says in a press release.

The companies are arguing the case on constitutional grounds, saying the Government is infringing their intellectual property rights – basically taking over their brands.

The Government argues it is not acquiring the brands, just restricting their use “in a manner appropriate and adapted to reducing harm to … the public”.

Cancer Council Australia chief Ian Olver says the industry’s estimates of the potential size of the illicit tobacco trade and the government projections were poles apart.

“They’re claiming absolutely ridiculous levels of illicit trade based on a report that they provided all the information for,” he said.

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