Bristol-based Imperial Tobacco has beaten market expectations in the six months to the end of March with adjusted operating profits of £1.524bn against a market consensus forecast of £1.520bn. Earnings per share were 93.1p against a consensus estimate of 92.7p.
Chief executive Alison Cooper said: “Imperial has seen 3% growth in first half revenue and profits with earnings up 5% and dividends up 13%.”
These were good results, she added, with the business focused on four sales growth drivers – its portfolio, innovation, customer engagement and pricing. She described sales growth momentum as really encouraging with Imperial increasing overall market share.
Nevertheless, Imperial saw a drop in the volume of sales of both cigarettes and fine cut tobacco. This is measured in “stick equivalents” (the industry describes cigarettes as sticks). Stick equivalents over the six months were 159.1bn, a 4.1% drop on the same period of last year. The company admits its first quarter was “challenging” not least because of the economic problems in Spain where net revenue declined by 4% to £239m and adjusted operating profit was down by 2% to £106m.
Despite this, Alison Cooper declared herself “pleased with the ongoing success of our key strategic brands Davidoff, Gauloises Blondes, West and JPS, as well as the recent cigarette and fine cut tobacco share progress we’ve made in both the EU and emerging markets”.
Ms Cooper admitted that one area of concern is the US – a hugely competitive marketplace where Imps has a new management team. The focus there again is on the four sales drivers and the group is “really looking forward to” getting its position there fixed in the coming period.
She added: “We have a great portfolio with Davidoff growing 2%, Gaulois 11% with West experiencing particularly strong growth in Asia and JPS strong in the UK and Australia.”
Imperial Tobacco has world leadership in fine cut tobacco, cigars, rolling papers and tubes. It has 50 manufacturing sites, around 38,000 employees and operates in more than 160 markets – and the market reacted positively to its first half results today. Imps shares were up 2.39% or 59p at £25.23.