Rothmans reports loss after smuggling settlement
TORONTO (Reuters) - Rothmans Inc ROC.TO, which is being bought by Philip Morris International Inc (PM.N: Quote), reported a first-quarter loss on Tuesday, hurt by expenses after it admitted to helping tobacco smuggling.
Canada's No. 2 cigarette maker said it lost C$354.4 million ($334 million), or C$5.20 a share, compared with a profit of C$33.8 million, or 49 Canadian cents a share, a year earlier.
Rothmans said its profit was hit by expenses relating to a settlement involving its unit Rothmans Benson & Hedges Inc, which in late July admitted to aiding the contraband tobacco trade.
The police investigation relates to the years 1989 through 1996, the company said, when tobacco was exported from Canada to the United States and then smuggled back into the country to avoid high taxes.
Under terms of the settlement, Rothmans said it will pay a total of C$550 million this year and over the next 10 years.
Imperial Tobacco Canada Ltd. -- a unit of British American Tobacco (BATS.L: Quote) also admitted it aided the contraband tobacco trade. Together, the fines and settlement costs totaled more than C$1 billion.
Rothmans said it logged an expense of C$415 million in the quarter to recognize the settlement.
As well, the Rothmans Benson & Hedges said it has logged a related expense of C$9.7 million.
Rothmans said adjusted operating earnings were C$35.4 million, or 52 Canadian cents a share in the quarter. Continued...