Imperial Tobacco 1Q In Line, Currency May Benefit Fiscal Year

02/04/2009

DOW JONES NEWSWIRES LONDON -(Dow Jones)- Imperial Tobacco Group PLC (IMT.LN) reassured the market over its fiscal first-quarter performance Monday and said the weakness of sterling could benefit the company during the rest of 2009. The world's fourth-largest global tobacco group by sales said in a trading update that its underlying performance in the three months to Dec. 31 remained in line with its expectations. "However, should current foreign exchange rates persist, they will have an overall positive impact on our 2009 results," it said. The benefit to the company's underlying profit from sterling's weakness will be slightly offset by higher interest payments and a larger net debt as some of the group's debt is in euros and dollars. "In the first quarter of 2009 we maintained our growth momentum with further cigarette share gains in a number of our mature European markets as well as in many of our emerging markets in Eastern Europe, Africa and the Middle East," said Chief Executive Gareth Davis in the statement. The company benefits further from higher sales abroad when revenues are translated into sterling, which has weakened against major currencies in recent months. "Overall, this has been a pleasing start to the year," Davis added. "While we will not be immune from the current economic situation, we will be resilient, irrespective of there being some impact on our cigar and non-tobacco logistics businesses." The market welcomed the reassuring tone of the update and by 0801 GMT, the company's shares were up 9 pence, or 0.5%, at 1860 pence in a flat London market. The shares have lost about 13% of their value in the last year as concerns over the company's large debt following its acquisition of Altadis offset the relatively defensive nature of the tobacco sector. Imperial Tobacco employs about 42,000 people and has 58 plants worldwide making tobacco, paper and tubes. It sells its branded cigarettes and tobacco products - including Davidoff, West, Drum, Golden Virginia, Rizla, JPS and Lambert & Butler - in more than 130 countries. Imperial Tobacco is cutting 2,440 jobs, including 1,060 in France, and closing six factories as a result of the integration of Altadis - the Franco-Spanish tobacco group it bought a year ago for EUR12.6 billion. The company said it had remained focussed on progressing the integration, with the global sales operations now fully integrated. Formal consultation on the closure of a Berlin factory is expected later this month, while consultations in Spain are continuing it said. The deal consolidated Imperial's position as the world's fourth-largest global tobacco company, behind Altria Inc.'s (MO) Philip Morris, British American Tobacco PLC (BTI) and Japan Tobacco Inc. (2914.TO). Imperial's market share in the U.K., its largest market, declined slightly to 45.7% from 45.9%. The market itself declined by between 2% and 3%, it said - an improvement from the 4% decline caused by public smoking bans in 2007. Enditem