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April, 2012:
Tobacco stocks could damage your wealth
http://www.moneyweek.com/investments/stock-markets/uk/tobacco-stocks-terminal-decline-58202#
Smoking bans are becoming more widespread
What are the 20 best stocks listed in the UK? It’s the kind of thing you want to know before this year’s deadline for choosing your individual savings account (Isa) holdings, isn’t it? It’s good news, then, that Société Générale’s Andrew Lapthorne has made a stab at figuring out the answer, by compiling a list of the most consistent shares over the past 20 years.
These he counts as the stocks that you could have bought in any month since 1993 and been certain to make a positive absolute return, had you held them for five years. To find them, he took all the stocks with a long enough trading history – 329 qualified – and ranked them every month on a five-year total return basis. All those with any negative returns were removed.
A mere 20 remained. Of these, the top ten were: Domino’s Pizza, Centamin Egypt, BHP Billiton, Genus, Imperial Tobacco, Synergy Health, Dechra Pharmaceuticals, SABMiller, BG Group and Ultra Electronics Holdings.
That these companies have done so well in the past 20 years is no guarantee they will do anything useful at all in the next five, admits Lapthorne. But the fact that “they have delivered consistent share price performance over such a long period must indicate some form of competitive advantage”.
That makes sense – and a good few of the companies will surely make their holders nice returns.
Domino’s is an excellent example of a well-managed company that has tapped into rising consumer demand for convenience food – as is Greggs, which comes in at number 19 on the list.
Genus is a market leader and good pharmaceutical companies should be finding themselves in a demographic sweet spot.
But one bothers me. It is Imperial Tobacco.
Tobacco companies have had an extraordinary amount of bad publicity over the past 50-odd years. They’ve been in and out of court; they’ve paid out enormous settlements; the countries in which they operate have spent billions trying to prevent citizens from buying their products; and they’ve been severely limited in terms of how they can market, advertise and manage their brands.
Yet their shares have continued to be top performers. Look at how their businesses operate and you can glimpse the reason why. Big tobacco companies have very strong brands. There is never any new competition. After all, who’s going to put up the money to enter such a vilified and low-growth sector when they aren’t even allowed to promote their products?
Incoming Lorillard CEO Kessler made US$13M in ’11
6 April 2012
By MICHAEL FELBERBAUM
AP Tobacco Writer
Lorillard Inc. CEO Murray Kessler received a pay package valued at $13 million in his first full year on the job with the nation’s third-biggest tobacco company, according to an Associated Press analysis of a regulatory filing.
The pay package came in a year when the maker of Newport, Kent, True and Maverick cigarettes saw its profit rise nearly 8 percent to $1.11 billion and its revenue excluding excise taxes increased about 10 percent to $4.45 billion. Shipments rose nearly 7 percent to more than 40 billion cigarettes, compared with an estimated industry decline of 3.5 percent.
The compensation deal was disclosed in an annual proxy filing with the Securities and Exchange Commission filed Thursday.
Kessler, who joined the company in September 2010, received a salary of $1.2 million and a $3.5 million performance-based bonus in fiscal 2011. The value of his stock options and stock awards totaled $8.3 million.
The 52-year-old, who also serves as board chairman, received $3.7 million for 2010.
Lorillard also announced that it will hold its annual meeting May 17 in its headquarters city of Greensboro, N.C., where shareholders will elect two directors to its board. Lorillard, the oldest continuously operating U.S. tobacco company, spun off from Loews Corp. in 2008.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive’s stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.
© 2012 Kansas City Star and wire service sources. All Rights Reserved. http://www.kansascity.com
Government files High Court tobacco defence
General Nicola Roxon is ready for a fight over plain tobacco packaging laws. Source: The Courier-Mail
THE federal government has formally rejected big tobacco’s High Court claims that the commonwealth is actually acquiring the companies’ brands through its new cigarette plain packaging laws.
The government lodged its detailed submissions to the High Court today in response to the legal action launched by four big tobacco companies.
In November last year, the government passed landmark laws forcing all cigarettes to be sold in drab olive-brown packs by December 2012.
British American Tobacco, Phillip Morris, Imperial Tobacco Australia and Japan Tobacco International are now challenging the legislation in the High Court.
They believe the laws breach the Australian Constitution because they seek to acquire property – in the form of brand names – without providing compensation.
But the government insists it is restricting the use of brand names and logos, not taking them over.
FDA: tobacco companies must report chemicals
http://www.koreaherald.com/national/Detail.jsp?newsMLId=20120405001151
WASHINGTON (AP) ― Tobacco companies will be required to report the levels of dangerous chemicals found in cigarettes, chew and other products under the latest rules designed to tighten regulation of the tobacco industry.
The preliminary guidance issued Friday by the Food and Drug Administration marks the first time tobacco makers would be required to report quantities of 20 chemicals associated with cancer, lung disease and other health problems. The FDA will release the information in a consumer-friendly format by next April.
“Cigarettes are the only mass-consumed product in this country for which consumers don’t know what’s in them, until now,” said Dr. Lawrence Deyton, director of FDA’s tobacco center, in an interview with the Associated Press.
Ammonia, carbon monoxide and formaldehyde are among the ingredients or byproducts of tobacco that are subject to the new rule.
Regulators have identified more than 93 harmful or potentially harmful chemicals in tobacco products, though the agency is only focusing on 20 for the coming year. The agency will take comments on the guidance until June 4. There is no deadline for when the documents will become final.
A law enacted in 2009 gave the FDA authority to regulate a number of aspects of tobacco marketing and manufacturing, though the agency cannot ban nicotine. FDA also gained authority to set standards on levels of harmful ingredients in tobacco products, though the agency is not yet using that power.
The same law lets the agency approve new tobacco products that could be marketed as safer than what’s currently for sale.
In separate guidance issued Friday, the FDA laid out the scientific studies it will require before any company can market a so-called modified-risk tobacco product. Companies must submit extensive testing data on health risks for users and non-users, behavior changes and consumer understanding of marketing materials for new products.
“The law sets a high standard to make sure that tobacco products marketed to reduce risk actually reduce risk,” Deyton said.
The FDA’s handling of modified-risk products has been highly anticipated by both the public health community and bigger tobacco companies, which are looking for new products to sell as they face declining cigarette demand due to tax increases, health concerns, smoking bans and social stigma.
Some tobacco companies have alternatives like snus – small pouches like tea bags that users stick between the cheek and gum ― and dissolving tobacco ― finely milled tobacco shaped into orbs, sticks and strips. But they are not explicitly marketed as less risky than cigarettes.
The FDA is required to respond to a company’s application within a year of its submission and acceptance. FDA officials would not comment on how many applications have been submitted to date.
Former Tobacco Exec Admits To Shredding Research About Health Risks Of Smoking
A Montreal lawyer and former top executive for Imperial Tobacco Ltd. testified that he helped destroy research that showed that the company was aware that smoking could cause cancer and other health problems, as reported by Les Perreaux at The Globe and Mail.
Roger Ackman, who ran Imperial’s legal department in the 1980s until his retirement in 1999, said he hired outside counsel to destroy at least 60 documents relating to company research on smoking and health problems, The Globe and Mail writes.
The testimony is part of a $27-billion class-action suit launched on behalf of Quebec tobacco addicts and smokers against three tobacco companies for denying proven health risks of smoking for decades.
From The Globe and Mail:
While Mr. Ackman was fuzzy on many details, a 2006 ruling in United States Federal District Court fills in many gaps. The ruling concluded research papers stored in the US, Canada and Australia were shredded to hide damning evidence.
The only remaining copies of many of the papers were stored in the United Kingdom by British American Tobacco, an Imperial affiliate, setting up a series of extra jurisdictional hurdles for plaintiffs – if they became aware the research papers existed.
According to the judge in the case, the shredding was done to protect U.S. tobacco company Brown & WIlliamson in its own lawsuit.
China Health Minister interview
BN 4/3/2012 0:00: China Faces Economic Growth Threat as Tobacco Spurs Cancer Risk
By Bloomberg News
April 3 (Bloomberg) — China, the world’s biggest cigarette market, may suffer slower economic growth because of cancer and other chronic diseases that are hurting the labor force, Health Minister Chen Zhu said.
Non-communicable diseases which cause prolonged sickness are responsible for four out of five deaths in China, compared with about 63 percent globally, and absorb about 70 percent of the nation’s health spending, Chen said in an interview yesterday. Fighting the threat requires tighter scrutiny of the tobacco industry, linked to 1 million deaths in China, he said.
China’s gross domestic product has grown an average 10 percent a year for the past three decades, transforming the nation into the world’s biggest exporter and replacing Japan as the second-biggest economy after the U.S. At the same time, the country now counts more than 90 million diabetes and 120 million chronic kidney disease sufferers — the most in the world.
“If we don’t curb the fast rise of chronic diseases in China, it will have an impact not just on people’s health, but also on society and the economy,” Chen, 59, said on the southwestern island of Hainan, where he is attending the Boao Forum for Asia. “It could affect the continuity of our economic growth because a lot of deaths caused by chronic diseases are in people younger than 60.”
The government wants to improve the efficiency of health services as it grapples with a rising incidence of life-long diseases. While the elderly were looked after in the past by their children, urbanization and the nation’s one-child policy have eroded the tradition of family care, shifting the burden to the state.
$558 Billion Cost
Unless preventative steps are taken, early deaths from so- called non-communicable diseases such as heart disease, stroke, diabetes and cancer will crimp China’s national income by $558 billion in the decade ending 2015, according to the World Health Organization. Half of sufferers who die of chronic diseases are under 65 years of age, according to the World Bank.
China will consider expanding its health-care workforce and increasing resources near major cities to improve access, Chen said. The government will also look at introducing standards to ensure quality isn’t compromised amid a new tendering system tested in Anhui province that encourages drugmakers to compete for state contracts to supply essential medicines.
“In evaluating the essential medicines, we need to put quality as the priority and not just the price,” Chen said. “The prices of drugs and equipment are a little bit high in China. Balancing the growth of the industry and controlling health expenditure is both a challenge and a dilemma for the government.”
Tobacco Addiction
Tobacco also presents another dilemma in China, the world’s biggest producer and consumer of the aromatic leaves, accounting for 38 percent of cigarettes smoked worldwide in 2009. The State Tobacco Monopoly Administration, the industry regulator, runs the world’s biggest cigarette maker, China National Tobacco Corp.
“The commercial activities of the tobacco companies should be totally separate from administrative supervision,” Chen said. “We are strengthening the leadership issue in China, and one of the key aims is to enhance the government’s supervision of the commercial activities related to tobacco,” he said.
Rapid industrialization and migration to cities that brought sudden improvements in living conditions have contributed to the increase in chronic diseases, said Chen, who as a 16-year-old youth in 1970 was sent during the Cultural Revolution to work in rural Jiangxi province. He taught himself traditional Chinese medicine while working in the villages and began practicing as a so-called barefoot doctor, according to a 2007 interview he gave to the People’s Daily newspaper.
Rush to Diabetes
“The social transformation in China is remarkable, but it is also maybe too rapid,” Chen said yesterday. “Once people get past poverty and start to lead better lives then new challenges start to emerge like diabetes.”
East Asians may be more susceptible to developing the metabolic condition because they tend to carry more of their body fat around their abdomens — a more deleterious place to store energy, he said.
“For East Asians to become diabetic, they don’t need to be very obese,” said Chen, who received formal medical training in Shanghai and a doctorate in 1989 from the Université Paris Diderot, where he specialized in hematology. “We need to figure out the biomarkers related to these kinds of disease tendencies so we can identify the high-risk populations and offer them preventive measures,” he said.
Chen is the first and sole minister-level Chinese official who doesn’t belong to any political party, and only the second minister not from the ruling Communist Party. He dedicates a small portion of his time — about 2 percent — to scientific research at the Shanghai Institute of Hematology, with the support of his wife, a doctor, and his mentor Wang Zhen-Yi, he said.
Chen and Wang were both awarded the Szent-Gyorgyi Prize in January by the U.S. National Foundation for Cancer Research for their work on a new leukemia treatment. He didn’t rule out returning to the laboratory full time when his current term as health minister is slated to end in March next year.
“It will depend on the needs of my people and my nation,” he said.
For Related News and Information: Top stories: TOP<GO> China health-care stories: TNI CHINA HEALTH <GO> China economic snapshot: ESNP CH <GO> Most-read stories about China: MNI CHINA <GO>
–Daryl Loo. Editor: Jason Gale, Kristen Hallam
To contact Bloomberg News staff for this story: Daryl Loo in Beijing at +86-10-6649-7540 ordloo7@bloomberg.net
To contact the editor responsible for this story: Jason Gale at +61-3-9228-8733 or j.gale@bloomberg.net
Tobacco display changes welcomed – Local – Hartlepool Mail
http://www.hartlepoolmail.co.uk/news/local/tobacco-display-changes-welcom
ed-1-4411146
Tobacco display changes welcomed
Published on Tuesday 3 April 2012 12:00
A CAMPAIGN group has welcomed moves to stop retailers selling tobacco
from eye-catching displays.
New laws on point of sale legislation come into force on Friday that will
require all large shops to cover tobacco displays and hide from view the
wide selection of colourful tobacco brands currently on the market.
Ailsa Rutter, director of North East campaign group FRESH, said: “If you
walk into any shop across the country currently, you can’t help but
notice the highly colourful tobacco displays designed to catch the eye
and attract customers. These are often directly behind sweet counters,
catching the eye of children.
“In the North-East the average age that people start smoking is just 15,
but some start as young as nine years old. Smoking is a childhood
addiction and that is why making cigarettes less visible to young people
is a positive move forward in reducing tobacco promotion.”
But she added: “This is a welcome step, but it will not stop the tobacco
companies from using the pack itself to lure new customers – who are
usually young people – with pastel colours, holograms and fancy designs.
“This is why Australia is introducing plain, standardised packaging on
tobacco products later this year with more noticeable health warnings to
make smoking history for more children. I’d urge as many people to
support this when our Government launches a consultation in the spring.”
The new point of sale regulations will mean that all large shops with a
relevant floor space of more than 280 square metres will be required to
cover their open tobacco displays – while other smaller shops will have
to comply with the legislation from April 2015.
The new displays must not exceed 1.5 square metres and will only be seen
when staff are serving customers or carrying out other day-to-day tasks
such as stocktaking.
Richard Ferry, of the North East Trading Standards Association, said: “We
support these efforts to make cigarettes seem less glamorous to children
and young people, to reduce the likelihood of under-age purchase
attempts.”
Tobacco displays were covered in shops in Ireland in 2009 and a study
funded by Cancer Research UK found that it changed young people’s
attitude to smoking without resulting in retailers losing money
Ban smoking in cars call: Experts want it to be made illegal for sake of kids’ health – Mirror Online
http://www.mirror.co.uk/news/uk-news/ban-smoking-in-cars-call-experts-777614
Ban smoking in cars call: Experts want it to be made illegal for sake of kids’ health
The Government has launched an advertising campaign on the “hidden dangers” to children from breathing in second-hand smoke
Danger: A man holds a cigarette while at the wheel of a car
PA
Child health experts last night called for a ban on smoking in cars.
The Government has launched an advertising campaign on the “hidden dangers” to children from breathing in second-hand smoke.
But experts said it did not go far enough and children needed to be legally protected from adults smoking in vehicles.
Professor Terence Stephenson, president of the Royal College of Paediatrics and Child Health, said: “Levels of tobacco smoke in a car can be even higher than in a smoky bar and second-hand smoke has been strongly linked to chest infections in children, asthma, ear problems and cot deaths.
“We have long campaigned on this issue and today’s announcement is a significant victory.
“But when it comes to smoking in cars when children are present, we are calling on Government to now go the extra mile and make it illegal.”
“The State does have a duty to protect children’s health and intervene where necessary.
“Other progressive legislation such as seat-belts in cars and banning drink-driving, once met with scepticism, have proven to make a significant difference.
“I have no doubt an outright ban on smoking in cars would have the same positive results.
“You can’t smoke in public places anymore. You can’t inflict your smoke on your colleagues. So why should you be allowed to inflict it on children?”
New TV and radio adverts in England will show that smoking by a window or the back door does not protect youngsters from harmful effects.
According to figures from the Royal College of Physicians, millions of children in the UK are exposed to second-hand smoke that puts them at increased risk of lung disease, meningitis and cot death.
Second-hand smoking results in over 300,000 GP visits among children ever year, 9,500 hospital visits and costs the NHS more than £23.6 million annually.
A survey of 1,000 children aged eight to 13 whose parents are smokers found 98% wished their parents would stop smoking, 82% wished their parents would not smoke in front of them at home and 78% wished they would not smoke in the car.
Meanwhile, 41% said cigarette smoke made them feel ill while 42% said it made them cough.
Dr Charles Godden, consultant paediatrician at the Royal Surrey Hospital, said: “I see children every week with conditions which are made worse by second-hand smoke.
“Most parents would be horrified to know that even a short car journey where an adult has been smoking would result in breakdown products of nicotine in their child’s urine.
“This shows exactly why we should all make our homes and cars smoke-free and that children need protection from exposure to second-hand smoke.”
Health Secretary Andrew Lansley said: “We all know smoking kills but not enough people realise the serious effect that second-hand smoke can have on the health of others, particularly children.
“This campaign will raise awareness of this danger and encourage people to take action to protect others from second-hand smoke.
“This is just one part of our wider strategy on tobacco. We need to do more.”
But Simon Clark, director of the Forest smokers’ group, hit back. He said: “Yet again smokers are hit by a fusillade of estimates and calculations designed to spread fear and revulsion.
“It’s only a matter of time before loving parents who smoke in or around their homes are accused of child abuse and risk having their children taken into care.
“Tobacco is a legal product. Adults must be allowed to smoke somewhere.”