Bristol-based Imperial Tobacco, the South West’s largest business by turnover, overcame tough conditions in some of its markets to achieve a 3.7% increase in total annual revenues to £29.2bn with adjusted operating profit up from £2,53bn to £3.1bn, a rise of 1.2%.
Profits before tax rose from £2.11bn to £2.15bn, some way short of the £2.44bn the market was expecting but earnings per share rose 19.4% to 177.3p while there was a significant boost to the full-year dividend pay-out, up 12.8% to 95.1p, a penny ahead of market expectations.
During the year to the end of September Imperial, which is building a new HQ in South Bristol, said it made gains in the EU and delivered an excellent performance in emerging markets outside the EU. Its key brands Davidoff, Gauloises Blondes, West and JPS had another strong year with overall volumes up 4%.
However, exceptional circumstances made Spain a difficult market following the ban on smoking in public places which came into effect in January and excise duty increases. Consumers were already feeling particularly cost conscious as a result of the tough economic conditions – and profitability was also hit by competitor activity. This led to Imps cutting prices to protect its market leadership and the long term sustainability of the Spanish business. Imperial estimates that the overall market was down from 80m to 69.2bn cigarette equivalents with the cigarette market down by 15% and growth in fine cut tobacco of 5%.
UK net revenues were down 3% to £869m but Imps grew its share of the sector to 46% with another positive performance from value brands JPS Silver and Windsor Blue. Its overall cigarette share was 45.1% and it is strengthening its portfolio with the national roll out of innovative GlideTec packs for Lambert and Butler.
Chief executive Alison Cooper said: “"This good performance reflects the strength of our total tobacco portfolio and our ability to use this unique asset to drive sales and profit growth across our international footprint. I'm particularly pleased with the overall growth in our key strategic brands Davidoff, Gauloises Blondes, West and JPS.
"We mitigated the impact of difficult conditions in Spain with gains elsewhere in the EU and excellent growth in the emerging markets of Eastern Europe, Africa and the Middle East and Asia Pacific. Our focus on capitalising on consumer growth segments continues to be supported by disciplined portfolio and capacity investments."
She added: "We are confident of being able to build on our growth momentum in EU and non-EU markets. We have been alert to changing consumer dynamics, enabling us to capitalise on both value seeking consumer trends in the EU, as well as the growing demand for our global brands and products in Non-EU emerging markets. This effective portfolio management approach will enable us to build further sales as we continue to capitalise on meeting the demands of more consumers in more markets on more consumption occasions.
"We are focused on delivering, quality earnings growth and believe we are well positioned to build on our achievements. Our focus on sales underpinned by our disciplined approach to cost and cash management will enable us to continue to create long term sustainable value for our shareholders."
