Imperial Tobacco Group Plc (ITYBY.PK, IMT.L) reported Tuesday an increase in revenues for nine months, despite a decline in volume. The British tobacco products maker confirmed that the overall results for fiscal 2012 is in line with the Board's expectations.
Chief Executive Alison Cooper said, "This good performance builds on the positive sales momentum we're generating across our total tobacco portfolio in both EU and Non-EU markets."
In its interim management statement for the 9 months ended June 30, the company said its tobacco net revenue increased 3 percent, excluding the impact of foreign exchange, reflecting the growing contribution from key strategic brands and innovation initiatives. Meanwhile, stick equivalent volumes declined 3 percent.
Revenues from key strategic brands Davidoff, Gauloises Blondes, West and JPS increased 13 percent and combined stick equivalent volumes grew 6 percent.
In fine cut tobacco, volumes increased two percent, excluding the impact of Poland, where market volumes declined 37 percent due to an increase in non-duty paid volumes.
In cigars and snus, volumes of luxury Cuban cigars edged up one percent in total and by 10 percent in emerging markets, and snus volumes grew by 39 percent. The company recorded excellent emerging market growth in Cuban cigars and significant snus gains.
The company announced or implemented price increases in a number of markets in the third quarter, aiming to enhance revenue growth. The company said it has now embedded over 90 percent of assumed pricing for the year.
On a geographical basis, Spain's fine cut tobacco volumes increased 19 percent, although the environment remains challenging with market stick equivalent volumes declining 11 percent. Outside the EU, the company's key strategic brands performed well in numerous emerging markets in Asia-Pacific, Africa and the Middle East and Eastern Europe. Meanwhile, Ukraine continues to be impacted by illicit trade with market volumes down 11 percent.
USA remains very competitive and the company is refining its strategy there to improve performance, with a focus on building sales across portfolio in key states.
The company's logistics business is performing well in a challenging operating environment. The firm continues to focus on cost management, business integration and development of new services to maximise profitability.
Looking ahead, Cooper said, "Challenging conditions persist in some markets but we have a strong record of delivering growth in this environment and remain in a good position to continue maximising value for shareholders."
In addition, Imperial Tobacco said it continues to vigorously challenge extreme regulatory proposals such as plain packaging that are not based on credible evidence and will only serve to fuel the illegal trade in tobacco.
Imperial Tobacco will make a detailed submission to the UK plain packaging consultation and expects the outcome of the court hearing in Australia to be announced later in the year.
In London, Imperial Tobacco shares are currently trading at 2,439 pence, down 10 pence or 0.41 percent.
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