Imperial Hails Low-Cost Cigarettes

Source from:  Oct 31 2007 icwales.icnetwork.co.uk 11/01/2007

IMPERIAL TOBACCO'S best-selling low-cost cigarette brands helped the firm deliver "excellent" UK results yesterday despite the impact of smoking bans and poor weather. The Bristol-based firm said the UK's top-selling Lambert & Butler and Richmond economy cigarettes both increased share in a domestic market which slipped an estimated 2% to £47.9bn last year. Operating profits in the UK grew 11% to £564m – also helped by cost savings and price increases – but the firm saw an "initial decline" in cigarette volumes after the introduction of bans in England, Wales and Northern Ireland and the summer washout. Imperial said it was "well placed" to build on its UK position but expects annual market declines of between 3% and 4% a year. Overall group pre-tax profits were up 6% to £1.24bn in the year to September 30, in line with expectations. While Imperial now claims 46.4% of the UK cigarette market, it said cigarette volumes fell by 2% to 22.9 billion over the year. The company, which also makes Rizla cigarette papers, added that its share of the fine-cut tobacco market had declined slightly to 63.6% although its Golden Virginia brand continues to lead the market. But Imperial's overall volumes increased 7% after a six-month contribution from acquisition Commonwealth Brands, which makes discount cigarettes for the US market, and a strong performance from leading brands Davidoff, West and JPS. The company's most buoyant cigarette markets were in Asia, where the firm boosted operating profits by 17% to £295m despite currency losses after growing its presence in Taiwan, Laos and Vietnam. The firm is also looking to grow through further buys and said yesterday that its £11bn acquisition of Spanish cigarette group Altadis should be completed by January. Altadis, the maker of Gauloises and Fortuna cigarettes as well as Cuban cigars such as Montecristo, will consolidate Imperial's position as the world's fourth largest tobacco company behind rivals Philip Morris, British American Tobacco and Japan Tobacco. Imperial demerged from Hanson in 1996 and listed on the London stock market as a FTSE 100 company. Its products are sold in more than 130 countries worldwide. It employs around 14,500 staff and operates 32 manufacturing sites around the world. Enditem