Franco-Spanish tobacco group Altadis announced Wednesday it will axe nearly 10 percent of its staff in Spain as cigarette sales slump in the face of no-smoking bans and a booming black market in the recession-hit country.
Altadis, an offshoot of British-based Imperial Tobacco, will shed 114 of its 1,400 employees in Spain, mostly through early retirement, and close a factory in the southern city of Cadiz, the company said in a statement.
The group's cigarette sales have gone up in smoke in Spain, with volumes slumping by 40 percent in the past four months, Altadis said.
Spain's economy, the fourth largest of the eurozone, has been contracting since mid-2011 and retail sales fell 2.6 percent in April -- the 34th straight monthly decline.
Altadis blamed "regulatory" pressure in Spain, where smoking has been banned in cafes and restaurants since January 1, 2011 and the government has forced prices to rise.
But it also cited "a considerable increase in illegal sales, provoked largely by the situation of economic crisis."
Contraband cigarette sales accounted for 12 percent of the market in Spain, it said. On Monday, for example, Spanish police seized 520,000 packets of contraband cigarettes and arrested 17 people.
Altadis, the number one cigarette company in Spain, was taken over by Imperial Tobacco in January 2008. It was born in 1999 from the merger of France's Seita and Spanish firm Tabacalera.