Imperial Tobacco Sees Fiscal Year Trading In Line With Views

Source from:  Nasdaq 03/26/2009

Imperial Tobacco Group said Wednesday that its anticipated overall performance for the financial year to September 30 remains in line with management's expectations. The company said it is making good progress with integration and recently concluded its consultations in Germany and Spain. This successfully brings to a close all negotiations required to implement the European integration projects. The company said it remains on track to deliver the previously announced operational efficiencies of EUR180 million by the end of this financial year, of which EUR80 million will have been realised by the end of March. The company said it's estimates of EUR300 million by the end of our 2010 financial year rising to EUR400 million by the end of 2012 are unchanged. The change in timing of the U.K. budget from March to April is expected to alter the pattern of its U.K. profitability in 2009 resulting in a partial shift in performance from the first to the second half with no overall impact on the full year. The company said it anticipates a better than expected performance in its Rest of the World region being offset by the Rest of European Union, particularly in Poland, The Netherlands and travel retail. Following the enactment of the State Children's Health Insurance Program Bill in the USA in early February, significant increases in Federal Excise Tax (FET) rates on all tobacco products will be introduced on April 1, 2009. In advance of this, Imperial Tobacco said it has selectively increased prices of its products. Significant industry-wide cigarette destocking in March in light of the impending increase in the FET rate is expected to result in a shift in its USA volumes from March into April. The company said that with its strong presence in the discount cigarette sector combined with the relative positioning of its cigar portfolio, the company currently estimates the overall effect on its USA results for the 2009 financial year to be broadly neutral. A combination of factors has resulted in a temporary increase in the company's working capital in the first half of the year. These factors include pre- production ahead of duty increases in Central Europe and a temporary disruption in Logistics trading patterns in Spain following price changes earlier in the year. The compny said it expects these working capital increases to unwind in the second half of the year. In February, the company issued a EUR1.5 billion bond with an 8.375 per cent coupon maturing on February 17, 2016 and a GBP1.0 billion bond at a 9 per cent coupon maturing on February 17, 2022. These issuances provided sufficient funds to repay early the EUR2 billion bank facility maturing in July 2009 as well as provide additional finance alongside our ongoing cash generation in anticipation of debt maturities in July 2010. The company said that to ensure consistency for 2009 and future years it is its intention that the interim dividend per share will represent one-third of the prior year's full dividend. The Group's overall policy of progressive dividends based on underlying earnings growth remains unchanged. Enditem