Altria Group Inc (MO)

[EZ2]

I think it's a strong possibility !!

Altadis: 2006 Net Profit Fell 22 Percent
Thursday February 22, 6:13 am ET
Altadis Says 2006 Net Profit Fell 22 Percent on Tax Rises and Smoking Restrictions

MADRID, Spain (AP) -- Tobacco company Altadis SA, the maker of Fortuna, Gitanes and Ducados cigarette brands, said Thursday that its 2006 earnings fell 22 percent amid pressure from core Spanish markets due to higher taxes and wider smoking restrictions.
Net profit dropped to euro453 million (US$592 million) in 2006 from euro577 million a year earlier, the Spanish-French company said. Annual sales fell 3.4 percent to euro3.97 billion (US$ 5.19 billion), below market projections of euro3.99 billion (US$ 5.21 billion). The company did not break out quarterly results.

Revenues from cigarette sales at Europe's fourth-largest tobacco company fell 15 percent to euro1.69 billion (US$ 2.21 billion) in 2006 from euro1.98 billion in 2005. The drop follows stricter antismoking policies by the Spanish government and higher taxes in an effort to lower cigarette consumption.

Altadis' shares have been volatile in recent months, as the company has been seen as a takeover target in a sector that is consolidating due to wider global restrictions against tobacco consumption.

On Wednesday, however, Spanish newspaper El Economista said that Marlboro cigarette maker Phillip Morris, a unit of Altria Group Inc., initiated contact with Altadis regarding a potential takeover of the U.K.-based Imperial Tobacco.

Both Altadis and Altria declined to comment on the report, which did not cite sources.

Altadis, which is also the world's leading cigar distributor through its 50-50 venture with the Cuban state-owned cigar company Habanos SA, said earnings before interest, taxes, depreciation and amortization -- its preferred measure of profitability -- fell 6.8 percent to euro1.15 billion (US$1.50 billion).

The company said it is targeting double-digit growth in net profit in 2007 and is seeking to cut costs by about euro215 million (US$281 million) in three years, shutting down facilities and eliminating jobs.

Altadis shares fell 0.9 percent to euro38.70 (US$50.64) in Madrid trading.