Imperial''s Stick-equivalent Volume down 7% over Full Year

Source from:  Tobacco Reporter  10/29/2013

Imperial Tobacco's stick-equivalent volume sales during the year to the end of September, at 317 billion, were down by seven per cent on those of the year to the end of September 2012. Stick-equivalent sales include sales of cigarettes, and those of fine-cut, cigars and snus converted to cigarette-stick equivalents.

Meanwhile, the company reported that its stick-equivalent Growth-Brand volumes were down by two per cent to 129 billion.

'Our Growth Brands account for a significant amount of our volume and revenue generation and our aim is to increase this over time to further enhance the quality and sustainability of our business,' Imperial reported.

'These brands outperformed the market in the year, with volumes down less than the rate of market declines.

'Seven of our ten Growth Brands grew share and on an aggregate basis, we grew the share of Growth Brands from 5.1 to 5.4 per cent and increased net revenue by 2 per cent.

'Growth Brands now account for 41 per cent of our total volumes, up from 39 per cent last year, and 39 per cent of tobacco net revenues, up from 38 per cent last year.'

Imperial said, too, that while it was strengthening the sustainability of its core tobacco business, it was also pursuing opportunities for growth in other areas through its new standalone subsidiary, Fontem Ventures.

'Fontem Ventures has initially been focused on our entry into the fast growing e-vapour sector and will be launching its own products in 2014,' the company said.

'Fontem Ventures has also acquired further e-vapour assets and expertise from Dragonite International, a company founded by one of the pioneers of e-cigarette technologies, which has further enhanced our sector potential.'

Imperial's tobacco revenue during the year to the end of September, at £20,881 millon, was down from £21,161 million during the year to the end of September 2012. Net revenue was up from £7,005 million to £7,007 million.

Operating profit from tobacco was up from £1,447 million to £1,888 million, while adjusted operating profit was up from £2,989 million to £3,003 million.

"Our focus on driving quality growth and transitioning the business has delivered another year of earnings growth and further strengthened our sustainability," said chief executive, Alison Cooper.

"Market conditions remain tough. We remain focused on maximising our long-term growth potential and in 2014 our priority is to continue transitioning the business: increasing investment behind our key brands and markets to drive quality growth; delivering our cost optimization program; and implementing our stock optimization program.

"A reasonable working assumption for 2014 therefore is modest growth in earnings per share at constant currency, with another strong dividend increase of at least 10 per cent.

"Our actions in 2013 and over the coming year will provide us with a strong platform for growth in 2015 and beyond." Enditem