5th Nov 2013 13:50
LONDON (Alliance News) - Imperial Tobacco PLC Tuesday reported higher profits for its financial year ended September 30, as cost cutting and a smaller writedown in Spain offset further volume and revenue declines for its key cigarette brands due to weak industry volumes in Europe and Russia.
It said it will continue to revamp its business in the current year, increasing investments in brands and markets it has identified as its growth areas and cutting more costs. It is predicting "modest" growth in earnings per share at constant currencies this year, but said it will increase its dividend by at least 10% after an increase of that amount for its last year.
The tobacco giant reported a pretax profit of GBP1.30 billion for the last financial year, compared with GBP1.08 billion a year earlier, and a net profit of GBP937 million.
The group said that cost-saving initiatives helped deliver GBP30 million in savings for the year, and said it is on track for GBP300 million a year by 2018. It expects to deliver incremental savings of around GBP60 million in fiscal 2014.
Imperial Tobacco said that due to continued economic weakness and duty increases in Spain, it incurred a further impairment of GBP580 million in the year. However, that was under half the GBP1.2 billion charge it booked for its Spanish business last year.
Overall revenue fell 1.1% to GBP28.27 billion, from GBP28.57 billion the prior year. Total cigarette volumes, which includes cigarettes, fine cut tobacco, cigar and Swedish-product snus volumes, fell 7% to GBP317 billion, from GBP341 billion a year earlier.
Its growth brands - Davidoff, Gauloises Blondes, West and JPS - saw revenue increase 2%. They accounted for 41% of total volumes, an increase of 2 percentage points.
However, industry volumes from its growth markets declined by 3% during the year, Imperial Tobacco said, largely due to significant market weakness in Russia, which suffered from adverse regulatory and excise tax changes.
Imperial Tobacco said that markets in the US and Russia have remained challenging, although it saw a stronger performance in a number of other markets, including Taiwan, Turkey, Italy, Greece, Scandinavia, Cambodia and Kazakhstan.
The company declared a final dividend of 81.2 pence per share, bringing the full year dividend to 116.4 pence per share, a 10% increase.
Last month, the European Parliament set out its position on proposed measures intended to make smoking less attractive, particularly to young people. These measures include forcing tobacco firms such as Imperial Tobacco to cover 65% of their tobacco packages with graphic health warnings. There also would be restrictions on flavoured tobacco such as menthol, and regulation of e-cigarettes.
Shares in the Imperial Tobacco were up 2% Tuesday afternoon, trading at 2,357 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright © 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
IMT.L