Imperial Tobacco Rolls Up 10pc Profit Increase

Source from:  Telegraph 11/11/2010

Austerity cuts failed to slow progress at Imperial Tobacco (LSE: IMT.L - news) as consumers switched from high-end brands to roll-your-own cigarettes, sending profits at the FTSE company 10pc higher. Profits excluding mark-to-market derivative movements hit £2.5bn, on a 6pc increase in revenues to £28.2bn in the year to the end of September. Reported profits before tax rose 124pc to £2.2bn. Unveiling her first set of full-year results since becoming chief executive in May, Alison Cooper said the "strong performance" was a reflection of rejuvenated sales of key brands Davidoff and West, as well as "consumers seeking value" in roll-your-own tobacco. Cigarette volumes fell by 4.2pc, while fine cut tobacco was up 8.7pc, leaving total volumes down 2.9pc at 348.5bn sticks equivalent. Ms Cooper said the figures demonstrated a typically defensive performance. "Spain is still a difficult economic environment, but we've had a robust year in Germany, France and the UK. It's what you'd expect from tobacco," she said. Investors welcomed a £1.5bn reduction in net debt to £9.3bn £500m ahead of consensus forecasts a fall Ms Cooper said left Imperial well positioned to consider further acquisitions after the £11bn takeover of Franco-Spanish rival Altadis in 2007. Imperial plans to reduce debt by a further £1bn in 2011, but Ms Cooper said that could be reined back if opportunities presented themselves. State-owned monopolies and joint-ventures in Asia remain among the most likely sources of expansion, she said. "For the right deal, we would be able to consider something. We are a good year ahead of where we expected to be [on debt reduction.] We generate cash like billy-o." Imperial shares rose 38p to £20.35 as the tobacco group increased its final dividend by 15pc to 60p, payable on February 18. Enditem