Imperial Keeps Growth Alight

01/01/2009

Britons may be stubbing out their cigarette habits but price increases and market share gains outside the UK have ensured that growth continues apace at Imperial Tobacco. In a trading update on Tuesday, the maker of Lambert & Butler cigarettes said overall performance continued to be in line with expectations in spite of the downturn in consumer spending. The group, which solidified its position as the world's fourth largest cigarette maker through last year's acquisition of Franco-Spanish rival Altadis, said that, while it would not be immune, it expected to remain "resilient" in the face of the global recession. Bristol-based Imperial also raised hopes that exchange rate movements could help lift results this year. Imperial said 2009 profits could be boosted if the pound continued to weaken - although it cautioned that sterling's slide could also increase net debt. Like its peers, Imperial said it had yet to see any sign that the global recession was having a material impact on the business. While cigarette volumes in the UK - Imperial's biggest market in terms of sales and profit - have fallen 4 per cent in the year to date, the decline has been made up for by an increase in prices and higher sales volume in the Middle East and eastern Europe. The upbeat tone struck by Imperial offers a sharp contrast to updates that have emerged from the financial and retail sector in recent months and will further underscore the tobacco sector's reputation as a safe haven for investors. "The big story in this statement is there is no story," said Adam Spielman, an analyst at Citigroup. "In an environment where everything is getting worse week by week, the most important point of the statement was its predictability." Imperial is "arguably, the most defensive of all European large cap consumer names," he said. The shares rose 26p to ￡18.77, a rise of 1.4 per cent on the day. Enditem