13th Feb 2014 09:22
(Correcting that Imperial's expectations are for its financial year ending in September, and the decline in tobacco net revenue was in the first quarter of the financial year.)
LONDON (Alliance News) - Imperial Tobacco Group PLC Thursday maintained its expectation for modest earnings per share growth at constant exchange rates in its current financial year, with an at least 10% increase in dividend, despite starting the year with a decline in reported tobacco net revenue in its first quarter.
The FTSE 100 cigarettes and tobacco company said it saw tobacco net revenue of GBP1.56 billion in the quarter ended December 31, 2013, down 6% on a reported basis but up 1% on an underlying basis. Imperial Tobacco's financial year ends on September 30.
Imperial said its total volume performance was down 5%, broadly in line with the industry.
In its Growth Brands, revenue was GBP29 billion, down 12% on a reported basis but up 2% on an underlying basis. Growth brands were boosted by strong performance in Growth Markets, Imperial said, as John Player Special Tobacco performed well in Australia, the UK and Italy, and Gauloises Blonde did well in the Middle East, offsetting lower demand in Morocco.
However, Imperial's brand Davidoff saw growth in Greece and share growth in Saudi Arabia offset by poor market conditions in Russia. The West brand was also hit by weak market conditions in Russia and Turkey, but performed well in Taiwan.
In Imperial's Specialist Brand tobacco, net revenue grew 1%, boosted by good performances from both its premium and mass market cigars, although this was offset by declines in fine cut tobacco in the UK and Spain.
Growth Markets tobacco net revenue grew 3% with strong growth in Russia, the Middle East and Indochina. In Russia, market decline was offset by strong pricing and product mix, the company said. In the US, sales volume was hit by market declines, although Imperial said that market share had improved during the quarter and profitability had increased.
In Imperial's other major segment, the Returns Markets, tobacco net revenue grew 1% as good performances in Australia and Germany offset industry declines in the UK and Poland.
The company also said that it was making good progress with its stock optimisation programme, and that it had "significantly" reduced trade inventories in a number of its markets, particularly in Iraq.
"We are focusing on driving out Growth Brands and targeting opportunities in our Growth Markets, complements by resilience in our Returns Markets," said Chief Executive Alison Cooper in a statement. "There is further stock optimisation work to be done, whilst our cost optimisation programme is on track and will contribute towards our investment plans."
Shares in Imperial Tobacco were trading up 2.9% at 2,289.00 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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