Imperial Tobacco Earnings Advance on Higher Cigarette Prices


Imperial Tobacco Group Plc, a Bristol-based tobacco company, announced higher operating income as the maker of Davidoff cigarettes raised prices to fight declining shipments in Europe.

Adjusted operating earnings increased to 3.16 billion pounds ($5.1 billion) in the 12 months ended September 30 from 3.1 billion pounds in 2011, second largest tobacco company in Europe said yesterday. The stock grew as much as 2.5% and it is the most since September 20.

Damian McNeela, an analyst at Panmure Gordon, said that there are some who are still unconvinced by the data; however the company believes that it achieved good results.

Imperial Tobacco has launched packs that flip open only with the help of one hand. In additon, the cigarette maker introduced flavored filters to improve demand and balance out declining consumption in Spain, where a worsening in the economy forced it to take a 1.2 billion-pound non-cash impairment charge. Increased prices in the UK as well contributed to growth. Imperial Tobacco is the market leader Profit in the European Union increased 4%.

Chief Executive Officer Alison Cooper said that it is difficult to grow in the EU.

The stock grew 1.4% at 2,364 pence in London. It has obtained 5.1% over the past year.

Pricier Smokes

The operating income for tobacco increased to 42.7% from 42.3%, which was “laudable” among high marketing spending on the Imperial’s brands.

The tobacco company increased the full-year dividend 11% to 105.6 pence a share, leading to a whole payout of 52.5% of income. Imperial Tobacco as well said that it has repurchased 528 million pounds of its own stock.

Tobacco earnings increased 4% in constant currencies to 7 billion pounds. Volume dropped 2.7%, better than the firm’s September projection of a 3% drop and an improvement on the 4.1% decline in shipments in the course of the first half. Shipments in fiscal 2013 may decline 0.5%, according to estimations of Barclays analyst Simon Hales.

Imperial still meets trading conditions in many of its key Western European markets,” Hales added.

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