Gallaher, the maker of Silk Cut and Benson & Hedges cigarettes said trading was in line with expectations and expected currency movements to have a marginally positive impact on earnings.

The company noted that higher tobacco taxes and an increase in government guidelines for personal tobacco import allowances had cut volumes in the UK duty-paid market by 4% - 5% - in line with expectations.

Gallaher said the strength of the euro had impacted margins on its exports to countries outside Euroland but off-set by the company’s euro-denominated profits into sterling, as is the case for its Irish profits into.

Gallaher added that its brands continue to trade strongly in Russia, Kazakhstan and Ukraine.