Imperial Tobacco profit rises but volumes fall

Imperial Tobacco Group PLC Tuesday issued a revenue growth due to rising prices, but strong demand in emerging markets was not enough to prevent a fall in volumes.

Number of world’s four global tobacco sales groups said that trading in line with expectations, placing a 3% increase in tobacco revenue for the nine months to 30 June on an ongoing basis the currency.

However, the total volume of the stick, which combines cigarettes and fine-cut tobacco, fell 3% over the same period.

“Difficult conditions persist in some markets, but we have extensive experience delivering growth in this environment and remain in good position to continue to maximize value for shareholders,” said Chief Executive Officer Alison Cooper.

Imperial is building its position in developing countries such as Eastern Europe, Africa, Middle East and Asia to offset the slowdown in developed markets, where consumers are struggling with tough economic conditions.

Smokers in developed countries move to cheap brands like tax increases, spending cuts, unemployment and inflationary pressures, the compression of discretionary spending, especially in Europe.

This trend also affects competitors Imperial. The market leader Philip Morris International, Inc (PM) last week reported a 3.8% drop in second quarter net profit, attributed in part to the less amount of debt in Europe. In March, British American Tobacco PLC (BATS.LN) recorded a slight drop in full year volumes, even if profits rose. BAT is due to report its first half profit on Wednesday.

Like his peers, Bristol, England-based Imperial offset soft volumes with higher prices for selected markets in order to preserve and enhance profits.

The first half of the company’s net profit, reported in May, was struck by a tax increase and one-time finance. It focuses on the full year dividend payout ratio of adjusted earnings to come in the share of growth.

Imperial Tobacco shares closed Monday at 2449 pence, considering the company in GBP24.3 billion.

Leave a Reply