30th Jan 2007 09:00
Imperial Tobacco Group PLC30 January 2007 30 January 2007 Annual General Meeting Trading Statement 2007 Ahead of the Annual General Meeting to be held later today, Imperial TobaccoGroup PLC issues the following trading statement: We delivered a strong set of results in the year ended September 2006 gainingcigarette market shares across all our regions; in 2007 we have made furtherprogress with encouraging performances in many of our markets, supported by ourongoing focus on reducing costs and increasing manufacturing efficiency. Theoverall anticipated trading performance of the Group for the financial year to30 September 2007 remains in line with our expectations. Commenting on the first quarter of 2007, Gareth Davis, Chief Executive, willsay: "I am pleased that we have again increased our cigarette volumes year on year,further building on our good organic growth in the previous 18 months, and Ilook forward to delivering another year of record performance. "With our key brands we have made some excellent progress including growth inWest and JPS volumes and the further international development of Davidoff,following our acquisition of the worldwide cigarette trademark last September. "We continue to review our buyback strategy, aiming to keep our capitalstructure efficient whilst maintaining balance sheet flexibility. Since the lastAGM, we have spent £515 million acquiring 29.4 million shares." The first quarter trading highlights are set out below. UK In the UK we have continued to perform well in the first quarter in a resilientmarket. Duty paid cigarette volumes have remained stable year on year and finecut tobacco volumes have increased, although we estimate that the annual dutypaid cigarette market may reduce by up to 4 per cent in this financial year.This takes into account the anticipated initial declines following theintroduction of bans on smoking in public places in Wales, Northern Ireland andEngland in the coming months. Our annual average market shares for cigarette andfine cut tobacco in December were 45.8 per cent and 65.0 per cent respectively(September 2006: 45.5 per cent and 65.3 per cent) with gains in Lambert & Butlerand Windsor Blue. Earlier this month we increased the recommended retail priceof a pack of 20 cigarettes by 10 pence for all our brands. Germany In Germany, following the cessation of Singles sales, duty paid cigarette marketvolumes have increased by 4 per cent in the first quarter, while other tobaccoproducts, including Singles, were down 26 per cent. Excluding Singles, othertobacco products were up 75 per cent year on year. Overall, this resulted intotal duty paid cigarette equivalent volumes being down 7 per cent. Cross-borderflows of cigarettes are estimated by the National Manufacturers' Association tohave risen to 22.2 per cent in our first quarter compared to 17.7 per cent forthe same period in the previous year. In October, we increased the retail priceof our brands for the first time in 22 months by 20 euro cents per pack of 17cigarettes. The migration of former Singles smokers to alternative products is still in thetransition stage. However, our newly introduced make your own products, West andJPS Single Tobacco, are performing better than expected and earlier this monthwe launched a second successor product, West Quickies XL. Against this background, our cigarette share grew to an annual average of 21.0per cent in December (September 2006: 20.7 per cent) with JPS continuing toperform well. Our traditional fine cut share also rose to an average of 16.7 percent in December (September 2006: 15.6 per cent). Rest of Western Europe In our Rest of Western Europe region, we increased our cigarette market sharesin the majority of markets, particularly in The Netherlands, where we grew ourannual average cigarette market share to December to 9.5 per cent (September2006: 8.9 per cent) and in France, where our share was up to 3.8 per cent(September 2006: 3.4 per cent). The continued excellent performances of Davidoffand West delivered further improvements in our market share in Greece. Trading conditions in fine cut tobacco continue to be competitive but recentinitiatives with brands such as JPS are progressing well, supporting our marketleadership in this sector. The generally difficult pricing environment we saw in the region last year hasshown some signs of improving in recent months with increases in cigaretteretail prices in several markets, including in Spain. Rest of the World In our Rest of the World region, our cigarette volumes continued to grow withnotable successes in Central Europe and Duty Free. Our performance in Taiwancontinues to improve with growth in West and the introduction of a number ofDavidoff line extensions. Elsewhere, Davidoff continued to drive our growth inthe Middle East and Russia whilst our value brands, Golden Gate and Moon,performed well in Central Europe. In Africa, we continued to grow our cigarettemarket shares in most of our domestic and main export markets and in Australiaand New Zealand, our market shares have improved on those at September. Earlier this month, we acquired a 66 per cent stake in the Estonian distributioncompany, Tremaco, and the trademark rights to three cigarette brands whichaccount for around 6 per cent of the 2.3 billion Estonian market. A commitmenthas been given to acquire the balance of Tremaco shares over the next threeyears. The total financial consideration, including the commitment, will be €0.7million (£0.5 million) in cash. This acquisition extends our geographicfootprint in the Baltic region and will enable Imperial Tobacco products to besold through Tremaco's established selling operation. Manufacturing In the first quarter, productivity continued to improve as we maintained ourfocus on business simplification, product quality and costs. We have ceasedproduction at our factory in Lahr, Germany. Both this and our factory inLiverpool will close by March of this year. We continue to optimise our factory footprint and additional machinery is beinginstalled in Volgograd and Kiev to support growing sales in Russia and theUkraine respectively. Board Change Imperial Tobacco Group PLC also announces that Colin Day has informed theCompany that he will be leaving the Board with effect from 16 February 2007 as aconsequence of his overall business commitments. As announced on 28 November2006 the Company is already in the process of recruiting an additionalindependent Non-Executive Director and is further reviewing the overallcomposition of the Board and its Committees. ENQUIRIES Alex ParsonsImperial Tobacco GroupGroup Media Relations ManagerTel +44 (0)117 933 7241 John Nelson-SmithImperial Tobacco GroupInvestor Relations ManagerTel +44 (0)117 933 7032 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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