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Gallaher Group PLC (GLH)

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Thursday 20 December, 2001

Gallaher Group PLC

Statement by Austria Tabak

Gallaher Group PLC
20 December 2001

                           N E W S   R E L E A S E

Gallaher Group plc announces that the following statement has been released by
Austria Tabak:

Austria Tabak posts higher revenue for first three quarters

Consolidated revenue up by 4.6 per cent - profit excluding charge for Malmo
factory closure two per cent higher

Vienna (OTS) - Austria Tabak again recorded growth in revenue and profits
before exceptionals (closure of the company's factory in Malmo, Sweden) in the
first nine months of 2001.  The effects of the jump in the pack price of
cigarettes from DEM 5 to 6 continued to weigh on the earnings of the German
vending machine business.

Consolidated revenue for the period registered a 4.6 per cent year-on-year
increase to ATS 40.1 billion (EUR 2.9bn).  Profit before exceptional items for
the first three quarters of 2001 rose by ATS 24 million (EUR 1.7m) or about
two per cent, to reach ATS 1.2bn (EUR 83.9m).

Earnings before interest and tax (EBIT) and exceptional items, and including
Austria Tabak's share of the profits of Lekkerland-Tobaccoland, declined by
3.9 per cent to ATS 2.0bn (EUR 145m), while profit on ordinary activities
(POA) fell by 5.5 per cent to ATS 1.9bn (EUR 139m).

The exceptional expenditure arising from the closure of the factory in Malmo
totalled ATS 534m (EUR 39m); the net cost after adjustment for tax effects was
ATS 385m (EUR 30m).

At ATS 770m (EUR 56m) net profit for the period was ATS 361m (EUR 26m) down on
the like period of 2000.

Tobacco Manufacturing Division returns higher volume and revenue

The company's Tobacco Manufacturing Division put in an increase of 7.9 per
cent in sales volume, to 23.9bn cigarettes, in the first three quarters of

Austrian sales totalled about 10bn cigarettes of which 5.8bn units were own
brands and 4.2bn units licensed brands.

Sales outside Austria advanced from 11.9bn units to 13.9bn units.

The division's revenue for the period (excluding tobacco tax) gained 4.8 per
cent, to stand at ATS 5.4bn (EUR 395m).  Earnings before interest, tax and
amortisation (EBITA) and excluding expenditure arising from the Malmo closure
rose by 4.2 per cent to ATS 1.6bn (EUR 117m) in the first three quarters of

Wholesale Division affected by continued downturn in vending machine business

The Wholesale Division's revenue for the period (including tobacco tax)
increased by 0.6 per cent to ATS 30.9bn (EUR 2.2bn).  However, EBITA fell by
12.8 per cent from the like period of the previous year, to ATS 940m (EUR
68m).  Lekkerland-Tobaccoland's contribution to profits is included in the

The German automatic vending business Tobaccoland Automatengesellschaft
reported a 9.3 per cent year-on-year decline in revenue for the first three
quarters of 2001.  The reason for this was the price increase introduced in

Lekkerland-Tobaccoland, the German convenience products company in which
Austria Tabak holds 25.1 per cent, posted an increase of about 11.5 per cent
in revenue for the first three quarters, to some ATS 59.4bn (approx. EUR
4.3bn).  Tobaccoland Austria's revenue was up by 4.6 per cent to ATS 17.1bn
(EUR 1.2bn), and that of Hungarotabak-Tobaccoland (H-T) by 3.2 per cent to ATS
5.2bn (EUR 378m). In line with Austria Tabak's interest in H-T, 51 per cent of
its revenue is included in Group and divisional revenue.

Vienna, 20 December 2001


For further information, please contact:

Claire Jenkins, Head of Investor Relations        Tel:  01932 859 777

Anthony Cardew, Cardew & Co.                      Tel:  020 7 930 0777