Imperial Tobacco blamed instability in the Middle East caused by Isis for a slump in cigarette sales.
The UK tobacco company said that a 2-5 per cent dip in sales in the last quarter could be explained by distribution problems in areas of Iraq and Syria controlled by Islamic State.
"Trading reduced significantly against a backdrop of a worsening political and security situation in territories where we have a high presence," Imperial Tobacco's earnings report read.
The sales dip is equivalent to 22 billion cigarettes.
The company added that deteriorating political and security situation has significantly impacted industry volumes.
The profits of the firm, which owns brands including Golden Virginia and Gauloises, dipped by 2 per cent to £959 million ($1.5m).
In 2014, the Bristol-based company warned that sales were expected to decline as a result of regional conflicts.
In territory Isis controls, the extremist Sunni organisation has enforced a strict no smoking policy, torching piles of cigarettes and tobacco it has seized, and punishing anyone caught smoking with a 10-day prison sentence.
There have been reports of persistent offenders being flogged as punishment.
The group has also set up giant adverts warning people of the dangers of smoking.
According to the group's hard line interpretation of Sharia law, suicide is strictly forbidden and smoking is considered a slow form of suicide.