According to economic director of Reemtsma International Praha (the second biggest domestic cigarette producer after Philip Morris CR), Czech cigarette consumption will decrease this year by 15%, Czech Press Agency informs. Since the new excise tax system put in place this year requires the cigarette producers to set fix prices of their products, we expect that they will exploit the opportunity and raise current prices somewhat. The overall effect of decreased volume and increased prices on Philip Morris’s revenues is therefore ambiguous and the news should not have impact on the stock.
(Jiri Soustruznik)