Sales of state-owned Bulgartabac Holding plunged 14.5 per cent on the year to 2 752 tonnes of cigarettes, according to the preliminary first-quarter report of the tobacco company  filed with the Bulgarian Stock Exchange.

Net profit during the same period dropped to 1.7 million leva, compared with 2.55 million leva in the first three months of 2007. Non-consolidated revenues of the company shed 27 per cent to 4.27 million leva.

Bulgartabac attributed sagging sales to the increased excise duty as of the start of the year and the higher retail price of its brands. At the same time, a number of rivals sell their cigarettes at competitive prices. The British American Tobacco (BAT) company sells Viceroy at even cheaper rates than Bulgartabac's flagship Victory brand.

Yet another reason is the cigarette smuggling and such with a foreign excise duty, which are available for sale not only in border regions, but also in larger cities.

Bulgartabac reported declines in the sales of all cigarette brands, whose price was subject to a hike. The trend is expected to persist.

For the first time in years, the holding's Blagoevgrad plant plunged into the red with a non-consolidated loss of 6.344 million leva. During the first quarter of last year, it reported seven million leva in profit. Sales were down 41 per cent on the year to 22 million leva.