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UPDATE: Imperial Tobacco Confirms Outlook And 10% Dividend Growth

Thu, 12th Feb 2015 10:21


LONDON (Alliance News) - Imperial Tobacco Group PLC Thursday said tobacco net revenue grew by 4% at constant currency rates to GBP1.49 billion in the first quarter of its financial year, driven by volume and revenue growth from its growth brands, and reaffirmed its outlook for the full year, with dividend growth of at least 10%.

However, the global tobacco firm said it continues to take a hit from adverse currency movements, primarily the strong pound, which in the three months to end-December pushed tobacco net revenue into negative territory at reported rates - down 2%. Excluding the impact of the group's stock optimisation programme, Imperial said tobacco net revenue was down 1%, with a 4% decline in volume.

"While still early in the financial year, movements in exchange since November mean that the current impact on earnings per share for FY15 is now estimated at around 4%," the company said in a statement.

Imperial measures volumes on a stick equivalent basis to reflect combined cigarette and fine cut tobacco volumes.

The company's growth brands - including Davidoff, Gauloises Blondes, JPS, West, Fine, News, USA Gold, Bastos, Lambert & Butler and Parker & Simpson and which generate a significant amount of its overall volume and revenue - grew underlying volume by 11% and net revenue by 15% in the quarter. Imperial said that growth was supported by its ongoing brand-migration programme.

Total tobacco volume was up 1% at reported rates to 71.8 billion stick equivalent, but was down 4% on an underlying basis, hit by the timing of price increases, Iraq and US mass-market cigars.

"We've continued to make good progress against our strategic agenda in the quarter and confirm our outlook for financial year 2015," said Chief Executive Alison Cooper in a statement.

Cooper said the group saw share and volume gains in a number of growth markets during the quarter, and a "continued robust performance" in returns markets, such as Australia and Spain, as well as net revenue growth in Germany and in Ukraine.

"In the UK, L&B Blue and Gold Leaf have grown share in what remains a competitive market. Increases in illicit trade in Morocco and further declines in dark tobacco in France held back our results. In Spain we strengthened our portfolio with brand migrations," the company said.

The group's growth markets, where it typically has below a 15% share of the market, include countries such the US, Italy and Vietnam.

"We are building our presence in Italy, Japan and Egypt, maintained stable market share in Russia, with Maxim continuing to perform well, and in the US, grew volumes of USA Gold in our key target states. We also made further gains through Skruf in Sweden and Norway," Imperial added.

Cooper said the group continues to focus its priorities on its growth and returns markets and are well advanced with its US integration plans.

Last year, Imperial Tobacco bought a slice of the Reynolds American Inc and Lorillard Inc deal, with Imperial acquiring a portfolio of US cigarette brands, office and productions facilities, which prior to the deal was owned by Lorillard.

"The US deal received overwhelming support from our shareholders and will further strengthen our platform for growth," said Cooper in Thursday's statement.

Imperial Tobacco Thursday confirmed dividend growth of at least 10% this year, the same as last year, and said it plans to deliver further incremental savings of GBP85 million in 2015, keeping it on track to save around GBP300 million per year from September 2018.

Shares in the tobacco company were up 0.9% at 3,058.00 pence Thursday morning.

By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty

Copyright 2015 Alliance News Limited. All Rights Reserved.

Alliance News



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