Imperial Tobacco Group Plc (ITYBY.PK,IMT.L) said Tuesday volume growth in key strategic brands and price increases helped it grow its first-half profit. The British tobacco products maker expects the momentum to continue through the year.
Imperial also said today it expects later this year the outcome of its legal challenge against plain packaging in Australia, and noted it will make a comprehensive submission to the UK Government on the same issue.
Australia has legislated that from this December, cigarettes should be sold in drab olive packets with graphic health warnings and no brand logos. Australia would become the first country to adopt such a law, with Britain, Canada and New Zealand planning to follow suit. Tobacco companies, including Imperial, are heavily opposing the law, citing numerous challenges.
In the first half, Imperial's pre-tax profit climbed to 1.11 billion pounds from prior year's 943 million pounds, as total revenues increased 2 percent to 13.96 billion pounds.
The company attributed the earnings growth in the first half to improved performance in the majority of European Union markets and excellent results in Asia-Pacific, partially offset by reductions in Spain and in the Americas. The Americas were hurt by competitive market environment in the U.S. and shipment timings ahead of the company's October 2011 price increase.
Meanwhile, earnings per share fell to 82.3 pence from 91.0 pence a year ago due to a significant increase in taxation. Adjusted earnings per share, which excluded certain items, grew 5.3 percent to 93.1 pence.
In the last three months of the half, key strategic brands' combined stick equivalent volumes grew over 6 percent and net revenue climbed 15 percent, offsetting weakness seen in the first quarter.
Tobacco net revenue grew 3 percent on a reported basis and 3.3 percent at constant currency to 3.39 billion pounds boosted by volume growth in key strategic brands, cigars and smokeless tobacco as well as price increases in many of its markets.
These offset the impact of a 4.1 percent decline in stick equivalent volumes to 159.1 billion. Total cigarette volume declined 4 percent, while fine cut tobacco fell 1 percent due to market weakness and trade destocking in Poland. Excluding Poland, fine cut tobacco volumes were up 3 percent.
In smokeless tobacco, snus volumes climbed 74 percent. Volumes of the company's largest brand Gauloises Blondes grew 11 percent.
Further, Imperial Tobacco said its Board has declared an interim dividend of 31.7 pence per share, an increase of 12.8 percent.
In London, Imperial Tobacco shares are currently trading at 2,516 pence, up 52 pence or 2.11 percent.
by RTT Staff Writer
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