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Black market blows 1.2 billion pounds out of Imperial Tobacco's Spain arm

LONDON--Imperial Tobacco has taken a 1.2-billion-pound (US$1.93 billion) write-down on its Spanish business as the impoverished country's smokers turn to cheaper black market cigarettes.

The world's fourth-largest cigarette group, which counts Davidoff, JPS and Lambert & Butler among its brands, said its pretax profit halved to 1.1 billion pounds in the year ending last month, although it raised its dividend by 11 percent to reflect higher tobacco prices.

Imperial Tobacco bought its Spanish rival Altadis, the maker of Gauloises and Fortuna cigarettes, for 11 billion pounds in 2007, before the European sovereign debt crisis, which saw Spain become one of the worst affected countries.

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