Imperial Tobacco expects this year’s results to be in line with expectations. The global group, which is building a new multi-million pound head office in Bristol, said in a trading update ahead of yesterday's annual general meeting that while underlying stick (cigarette) volumes were down net revenues are up reflecting a strengthening price/mix.
Chief executive Alison Cooper told shareholders: “Our continued focus on realising opportunities from our total tobacco portfolio supported by innovation and price optimisation has delivered underlying tobacco net revenue growth of 3% in the first quarter.
“Combined stick equivalent volumes of our key strategic brands Davidoff, Gauloises Blondes, West and JPS were up 3% and net revenues up 10% with our focus on consumer relevant innovation and new formats driving growth in these brands in cigarette in emerging markets and fine cut tobacco in the EU.
“Delivering the planned acceleration in our underlying sales momentum whilst continuing to realise cost and cash opportunities remain our priorities such that we are well placed to create further value for our shareholders this year.”
Overall stick equivalent volumes fall 7% in the three months to December 31 due to trading difficulties in Syria, Spain, the US and Ukraine. Syria accounted for 3% of the volume decline due to the ongoing impact of international sanction compliance, while the rate of the volume decrease in Spain was in double-digits. Meanwhile, a further 3% of the overall fall in volumes relates to trade stock levels around a price increase in the US and distributor de-stocking in Ukraine.
EU trading is said to be going well, with strong positions in cigarette and fine cut tobacco maintained in the UK and Germany. In Spain, Imperial expects the rate of volume decline to ease in the remainder of the year. However, the company said that it has given up market share in some markets “in order to further build our long term category margins through price optimisation”. In non-EU trading, the group highlights its performance in the key emerging markets of Asia-Pacific, Africa and the Middle-East as delivering good growth.
