Britain's Imperial Tobacco, the maker of Lambert & Butler and Gauloises cigarettes, said on Tuesday that annual net profits slumped 62 percent as it took a hit on assets in debt-wracked Spain.
Imperial said in a statement that profit after tax tumbled to £678 million ($1.1 billion, 842 million euros) in the 12 months to September 30 compared with net profit totalling £1.796 billion in 2010/11.
Revenue fell 2.0 percent to £28.57 billion as the company sold fewer cigarettes.
"Economic conditions remain difficult in Spain; high unemployment and increasing government austerity measures are placing further pressures on consumers and the duty paid tobacco market, with illicit trade a growing problem," Imperial said.
It added that "the macro economic indicators have resulted in us taking a non-cash impairment charge of £1.2 billion during the year."
Imperial was positive regarding the outlook, insisting that there were "significant growth opportunities" across Eastern Europe, Africa, the Middle East and the Asia-Pacific region.