MARLBORO - WINSTON - L&M - CAMEL - PARLIAMENT - KENT - CLASSIC

Cigarettes: sales were up EUR 20 million, +5.1%, reaching EUR 413 million. Spain, Morocco and the Middle East provided important growth to the sales of...

Overall performance of the Group during the quarter for key profitability indicators was in accordance with management's expectations: Group Ebitda increased at EUR 268 million, +6.6%; net income stood at EUR 110 million, +6.2%; and earning per share increased 11,6%.

Good results driven by the strong performance of the Spanish and Moroccan cigarette operations, Cuban cigars business and tobacco logistics in Spain.

The Group is proceeding with spinning the French logistic activity off from Seita's tobacco operations and transforming it into a legal subsidiary, as per schedule.

Economic sales at EUR 931 million (EUR 930 million in 2006).

Cigarettes: sales were up EUR 20 million, +5.1%, reaching EUR 413 million. Spain, Morocco and the Middle East provided important growth to the sales of the Division.

Cigars: sales reached EUR 188 million (down EUR 24 million, -11.4%). The unfavourable exchange rate variation, the challenging market trends in the US and the very strong comparison base of 2006, explain the performance.

Logistics: sales were up EUR 40 million, +14.3%, reaching EUR 319 million. Spanish market in both, tobacco and general logistics has been the major driver of this excelent performance.

Other operations, Aldeasa and corporate overheads, were EUR 43 million.

Group Ebitda at EUR 268 million (EUR 251 in 2006).

Restructuring generated EUR 12 million of cost savings.

Cigarettes: Ebitda was EUR 150 million, increase of EUR 34 million, +30%, reflecting the improvement of the margin in Spain, in addition to the positive change in the mix of sales, the increased level of inventories and also efficiency benefits.

Cigars: Ebitda decline of EUR 10 million, (-15.8%), to EUR 56 million (EUR 66 million in 2006), reflecting an unfavourable exchange rate evolution during the quarter, a higher than average comparison base and also tougher competition and a challenging market trends in the profitable US market.

Logistics: Ebitda increased by 33.2% to EUR 83 million (up EUR 21 million from EUR 62 million in 2006), driven mainly by the improved Spanish tobacco market.

Net income stood at EUR 110 million, +6.2% (EUR 104 in 2006). Earnings per share were EUR 43.5 cent (EUR 39.0 cent in 2006), an increase of 11.6 per cent significant restructruing and saving programs as per schedule.

Early 2006 the Group considerably amplified its restructuring and savings programs in order to address heavy changes in operations and in the tobacco business environment.

The industrial restructuring (launched prior to 2006), providing EUR 64 million savings.

The savings program launched on February 1st, 2006, with EUR 91 million savings.

The latest restructuring, affecting mainly to both corporate functions and business units management, launched on February 14th, 2006, generating EUR 60 million savings.

The total savings would be reaching EUR 215 million over three years: EUR 145 million savings were achieved in 2006 and EUR 46 million and EUR 24 million are being and are expected to be captured in 2007 and 2008, respectively.

Cigarettes: An improved Spanish market drove the performance.

The group sold 26.7 billion cigarettes during the first quarter of 2007 (24.2 billion in 2006), amounting to EUR 413 million (EUR 393 million in 2006).

The 10.4 per cent increase of volumes is mainly due to a recovery of sales in certain areas such as Russia and Middle East. The increase of sales is due jointly to the volumes and to the higher prices in Spain and good evolution of the Moroccan market.

Blond cigarettes (75% of total sales) stood at EUR 308 million (EUR 294 million in 2006). Sales grew in Spain, Morocco, the Middle East and Russia by respectively 9.4 per cent, 19.7 per cent, 12.7 per cent and 113.2 per cent. In France, blond sales remained almost stable. In Germany, markets trends are weighing against the segments where Altadis products are particularly strong.

Altadis key international blond brands, Gauloises, Fortuna and Gitanes, which jointly accounted for 58 per cent of the blond sales in value (EUR 177 million) and 49 per cent of the blond volumes (9.8 billion units), showed a volume increase of 4.8 per cent during the quarter, whereas in value terms they declined slightly by -2.5 per cent, due to the high comparison base of 2006 and the tough market trends occurred in Germany.

Cigars: affected by the weak dollar and market trends in the US.

The EUR 188 million sales broke down between US (55%), Havana cigars (19%) and Europe (17%). The Havana cigars and Spanish market performed outstandingly, but it was not enough to offset the reduction of the US sales and the dollar evolution during the quarter.

Sales of Altadis USA decreased by 10.7% in dollars and 18.1 in euros to EUR 102 million.

Sales of Havana grew by 7.0% in euros to EUR 35 million; they performed very well in mature markets (for example in Spain, Germany and Italy) and showed very encouraging performance in emerging markets (Russia, Asia-Pacific).

In Europe, sales decreased slightly in France and notably recovered in Spain from the drop happened at the beginning of last year following the entry in force of the new regulations restricting retail distribution.

Tobacco logistics sales (48% of total sales) stood at EUR 155 million (EUR 134 million in 2006). They reflected the trends of tobacco markets in volume, Spain (+0.7%), France (+0.7%), Italy (-0.6%) and Morocco (+3.1%), and indirectly the changes in retail prices.

General logistic activities posted a solid increase of 12.0%. Growth was achieved mainly in transport services in Spain and Portugal (+ 14.0 per cent), in books, magazines and publications (+23.9 per cent) and in pharmaceutical logistics (with sales of EUR 6 million and a +13.5 per cent growth). In Morocco, general logistics is developing fast and it has overcome the 10 per cent of total logistics economic sales in that country.

In 2007, as it has already done in the first quarter, the Group will resume the organic growth trend taking advantage of its strong potential for growth and of its unique and diversified assets. Focus will be placed on developing the business by supporting the equity of its brands. The restructuring programs currently in course will be fully implemented and will improve the performance. The continuing with the disposal of non core assets (EUR 650 million are targeted in the coming four years) and the corporate reorganisation plan in progress will provide a stronger base for the Group's distribution capability and its policy of returns to shareholders for coming years. As in the past, the Group remains commited to create value for its shareholders.