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Altadis First-Half Net Profit in Line, Weak Dollar Weighs

Bid target Altadis posted in-line first-half net profit of 247 million euros ($335.8 million) on Thursday, but predicted the second half could be sapped by the effect of dollar weakness on income.

"Altadis expects its organic performance will remain solid in the second half of 2007, although it is adjusting its expectations for the full year to incorporate the effect of the persistent weakness of the U.S. dollar (versus the euro)," it said in a statement.

More than half of Altadis' cigar revenues -- about one fifth of total revenues -- come from the United States.

Net profit was up 27% year-on-year as the Franco-Spanish tobacco group, under offer by Imperial Tobacco, improved margins.

Six analysts polled by Reuters forecast average net profit of 249 million euros on revenues of 1.945 billion.

In a statement, Altadis said sales rose 0.2% in the first half to 1.938 billion euros. EBITDA (earnings before interest, tax, depreciation and amortization) rose 7.2% to 590 million euros, against a poll forecast of 586 million.

In the first half of 2006, Altadis' results were hit by a price war and a new anti-tobacco law in Spain.

Since then tobacco sales have stabilised and the company has improved margins thanks to a rise in cigarette prices.

Earlier this week, analysts said the results would be of more interest to shareholders in Imperial Tobacco, which made a 12.6 billion euro friendly takeover bid for the maker of Gitanes and Fortuna cigarettes in July.

The 50 euros a share takeover offer, which was agreed after months of wrangling about price, would create the world's fourth-largest tobacco group.

Imperial hopes to complete the deal by the end of the year, once Spanish market regulator CNMV gives its go-ahead, expected in September or October.