Imperial CEO Says Dividend Interpretation Incorrect

Source from:  Reuters 05/13/2009

Britain's Imperial Tobacco on Tuesday insisted its dividend policy was unchanged and the market had come to the wrong conclusion over looking for just a moderate dividend rise after its shares fell sharply. The world's fourth-largest cigarette company said its policy of paying out around 50 percent of adjusted earnings as dividend remained, and it was the decision of its board in November over the final dividend for its year to end-September. Chief Executive Gareth Davis said it was the "incorrect conclusion" to draw that the dividend ratio would be cut. It was "possible", but he told a results briefing that the group had a strong "currency and cash tailwind" from the weak pound and its strong cash generation. However, he did say when Imperial bought German cigarette group Reemtsma in 2002 for 5.8 billion euros the dividend ratio fell to 47 percent in the following year before recovering back to 50 percent. Imperial's two house brokers, RBS and Morgan Stanley, anticipated that the dividend ratio would fall to 43-44 percent in the year to September 2009, with RBS saying the full-year dividend should be around 70 pence a share rather than the 80.5p payout it had previously forecast. Imperial had said, when reporting a 14 percent rise in adjusted earnings for the half-year to end-March, that the payout ratio of around 50 percent was unchanged "whilst recognising the cash impact of the Altadis restructuring". Imperial bought Franco-Spanish Altadis for 12.6 billion euro in January 2008, and Morgan Stanley said on Tuesday that Imperial was guiding towards a temporarily lower dividend payout to take into account the cost of restructuring at Altadis. Imperial shares fell as much as 6.5 percent early before trading down 4.4 percent at 15.61 pounds by 1345 GMT. Enditem