Imperial Increases Volumes by Seven percent

Source from:  tr.itsmyiq.com Oct 30, 2007 10/31/2007

The Imperial Tobacco Group's cigarette volume sales during the year to the end of September, at 200 billion, were up by seven per cent on those of the previous year, according to the company's preliminary results announced today. Cigarette sales in Imperial's 'rest of the world' region, which excludes Western Europe and the US, were up from 123.5 billion to 130.3 billion and fine-cut volumes were increased from 2,000 tonnes to 2,500 tonnes. The company benefited this year from the acquisition in April of Commonwealth Brands in the US where sales for the six months since the acquisition totalled 7.1 billion cigarettes and 100 tonnes of fine-cut. In the UK, cigarette sales were down from 23.4 billion to 22.9 billion, though Imperial's market share rose from 45.5 per cent to 46.4 per cent. Fine-cut sales increased from 2,100 tonnes to 2,200 tonnes but market share in this sector was down from 65.3 per cent to 63.6 per cent. In Germany, cigarette sales were increased from 19.9 billion to 20.4 billion and market share rose from 20.7 per cent to 21.3 per cent. Fine-cut sales dropped from 6,300 tonnes to 4,700 tonnes and Imperial reported its market share of the other tobacco products sector as down from 21.8 per cent to 19.1 per cent. In the 'rest of Western Europe' region, cigarette sales were down from 20.1 billion to 19.6 billion and fine-cut sales were down from 15,100 tonnes to 14,900 tonnes. In his strategic review, chief executive, Gareth Davis, said the year to September 30 had been another record year for Imperial Tobacco with further growth in cigarette volumes, cigarette market share gains within all regions, and excellent performances from the company's key brands. "Our cigarette volumes were up by seven per cent with key growth areas including Central and Eastern Europe, Germany and Asia together with six months' contribution from the Commonwealth Brands business," he said. "Cigarette market shares increased in our core markets of the UK and Germany as well as in Western Europe, Central and Eastern Europe, Asia, Africa and the Middle East. "Our successful brand strategy has ensured continued positive developments for our key brands Davidoff, West and JPS, growing volumes by five per cent, nine per cent and 18 per cent respectively. Since our acquisition of the Davidoff cigarette trademark in September 2006, we have launched Davidoff in several new markets and introduced a number of successful brand variants, all contributing to our volume and market share gains. "As well as developments in our existing markets, the acquisition of Commonwealth Brands has given us a firm foothold in the profitable US market. We are extremely pleased with its early performance, with returns on investment in the first six months exceeding our weighted average cost of capital. Our Master Settlement Agreement application is progressing and we expect to complete our application in a few weeks following constructive dialogue with the National Association of Attorneys General. "We have finalized our plans for the development of our own brands and are in a position to begin their rollout once we have completed all aspects of becoming a participating manufacturer in the Master Settlement Agreement. "In our manufacturing operations, our productivity increased by seven per cent demonstrating the excellent progress we continue to make with our ongoing business efficiency and simplification strategies." Turning to Altadis, Davis said that Imperial had received European Commission clearance in October 2007, subject to the enlarged group divesting a small number of fine cut and pipe tobacco and cigar brands in certain European markets. "As previously highlighted this will not materially affect the operational and financial performance of the enlarged group," he said. "We expect approval of our offer by the CNMV, the Spanish regulator soon and expect to complete the deal in January 2008. The rights issue, which is part financing the acquisition, will occur before 18 July 2008." Looking ahead, Davis said Imperial was focused on long term sustainable growth across the business and remained committed to its strategy of growing its operations organically and through acquisitions. Imperial reported net revenue up by four per cent to £3.28 billion, adjusted profit from operations up nine per cent to £1.475 billion, adjusted earnings per share up 12 per cent to 136.7p, and a full year dividend up 12 per cent to 69.5p. Enditem