Imperial Tobacco’s Share Price Rises despite Sales Volume Drop

on Aug 15, 2013
Listen Thursday, August 15th: Imperial Tobacco Group PLC (LON:IMT) today said that its reported stick equivalent volume and revenues declined by 7 percent and 3 percent, respectively, for the nine months to June 30, 2013. CEO Alison Cooper noted in an Interim Management Statement that short-term sales were impacted by overall weak industry volumes, especially in the European Union. Imperial Tobacco share price opened at 2,167.00p this morning, 0.6 percent above yesterday’s closing level, but soon gained pace and rose above 2,200.00p.

Imperial Tobacco estimated that EU stick equivalent industry volumes for the 9-month period were down 6 percent against a 5 percent fall for fiscal half-year, reflecting austerity measures, rising unemployment and increased illicit cigarette trading. Nonetheless, the company said that its market share in a number of markets across the EU has improved over the last quarter.

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Outside the EU, Imperial Tobacco operates in a number of other markets and according to the company’s estimates stick equivalent volumes in these regions have declined by 2 percent in the nine months to end-June. Eastern European markets, especially Russia and Ukraine, were characterised by an on-going weakness while Asia-Pacific, Africa, and the Middle East regions were delivering good performance. During the last quarter the producer of Davidoff and West cigarettes completed the acquisition of its distributor in Cambodia. The company expects that the acquisition will allow it to further expand its business in the region.

Imperial Tobacco believes that its cost optimization programme will start delivering annual savings of £300 million from September 2018. The company confirmed its intentions to continue investing the cash it generates in capital investments, buying back shares (£432 million to June 30, 2013), and increasing dividends.
!m[Austerity Measures, Unemployment and Illicit Cigarette Trading Dent Industry Volumes](/uploads/story/4836/thumbs/pic-1_inline.jpg)

Peter Corijn, former Procter & Gamble employee, joined Imperial Tobacco as Group Marketing Director on August 1 this year. His main objective will be to lead the group’s international marketing and brand development strategies.
“Our full year expectations remain unchanged. We continue to focus on maximising opportunities for our total tobacco portfolio in the EU against a backdrop of weak industry volumes and are driving good in-market performances in Asia-Pacific and Africa and Middle East, with our share improving in many markets,” CEO Cooper said in the interim management statement.
**Imperial Tobacco’s share price was 2,192.00 as of 15.08.2013, 08:42 BST.**


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