Imperial Tobacco Fares Well in Difficult Times for the Industry

on Oct 30, 2012
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Shares in Imperial Tobacco (LON:IMT), the London-listed tobacco company, gained 2 percent to £2.38 a share in the early hours of trading after the company posted its third-quarter results.

**Q3 Results With Comments From CEO Alice Cooper and FD Robert Dyrbus**
On 30 October Europe’s second-biggest tobacco company announced that its full-year profits rose by 8 percent after it increased prices in a number of markets including the UK.
Adjusted earnings per share rose to 201 pence in the 12 months ending 30 September from 188 pence a year earlier. The Bristol-based company slightly beat analysts’ estimates, who predicted earnings per share of 199 pence. Operating profit showed modest gains and climbed to £3.16 billion from £3.1 billion for the same period in 2011.

The group registered a fall in stick equivalent volumes from 346 billion to 336.6 billion. The decline was a result of “ongoing market weakness in Ukraine and Poland and compliance with international trade sanctions in Syria,” as explained by the company. “Key” brands, including Davidoff branded cigarettes, reported volume growth of 7 percent and now account for 30 percent of total stick equivalent volumes.

The company’s board has recommended a final dividend of 73.9 pence, bringing the total dividend in 2012 to 105.6 pence – 11 percent higher than last year. Shareholders are expected to receive the payment on 18 February 2013. “…we are committed to maximising returns to shareholders. The dividend this year increased by 11%, which was ahead of adjusted earnings per share growth, and the payout increased to 52.5%. The Board’s reiterated its intention to increase dividends per share ahead of earnings per share for the foreseeable future and this will also increase the payout ratio over time.” commented Robert Dyrbus, Finance Director (FD).

!m[Tobacco Maker Achieves an 8 Percent Rise in Annual Earnings Supported by “Key Brands” Revenue Growth ](/uploads/story/671/thumbs/pic1_inline.png)Imperial Tobacco’s CEO Alison Cooper explained in an interview with financial broadcaster http://www.cantos.com that the EU has been very challenging as a market but the company still managed to increase its revenue in the area by 3 percent and profits by 4 percent. The US remains a drag not only for Imperial Tobacco but for the industry as a whole, yet the company’s premium cigar business in the country performed exceptionally well with volumes up 10 percent and sales up 12 percent this year.

Mr Dyrbus also explained that due to the continued deterioration in the Spanish economy the company has taken a reduction of the intangibles previously allocated to Spain back in 2008, by £1.2 billion. “This has no impact on our view of what our Spanish operations can deliver in the future.” added the FD of Imperial Tobacco. “Spain remains a very important market for us and the team there are doing a great job.”
Alison Cooper, who has been Imperial Tobacco’s CEO for two years and is one of only two women CEO’s of a FTSE100 company, commented she is absolutely satisfied with the progress of her strategy. “We have made the right choices around how we drive sales growth in Imperial. We have put consumers at the heart of our strategy and that understanding of their motivations applied to our total tobacco portfolio is a key differentiator for us. It is a fantastic portfolio – with cigarette, with fine cut tobacco, cigars, snus – we really do have the brands, the products to provide the best consumer tobacco experiences.” she said in the interview following the third-quarter results.

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