Imperial Tobacco profits rise despite volume fall

Imperial Tobacco’s full-year profits rose despite falling volumes, the company revealed yesterday, as it forecast “modest” growth for the coming year.

Pre-tax profits for the year ending 30 September 2013 rose 16.7% to £1.26bn, while group sales slipped 1% to £28.27bn. Tobacco net revenue was down 1% on total volumes down 7%.

Imperial cited a “challenging economic environment”, particularly in countries such as Spain and Russia, while the UK market also saw declining volumes.

“We increased our cigarette share [in the UK] and implemented a number of portfolio initiatives to reinforce our market-leading positions in cigarette and fine cut tobacco, including new Lambert & Butler packs and a rejuvenation of the Golden Virginia brand family,” the company said.

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

Alison Cooper, CEO

UK tobacco net revenues slipped to £915m, down from £936m the year before.

“Our focus on driving quality growth and transitioning the business has delivered another year of earnings growth and further strengthened our sustainability,” said CEO 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 optimisation programme; and implementing our stock optimisation programme. 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%.

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

Imperial’s cost-saving programme, announced in January, incurred £107m in charges for the year, although the company says it will save it around £300m a year by 2018. Total charges and impairments hit £270m for the year.

In August, Imperial revealed plans to launch an e-cigarette in 2014, as it looks to offset falling tobacco volumes.

Chairman retires

Separately, the company announced yesterday its chairman Ian Napier will retire from the board following its AGM on 5 February 2014. He will be succeeded by Mark Williamson, currently deputy chairman and senior independent director.

“Mark’s extensive experience has been a great asset to the group since he became a non-executive director in 2007 and we are delighted that he has agreed to succeed Iain as chairman,” said non-executive director Michael Herlihy.

“I would also like to thank Iain for his tremendous leadership and guidance since becoming chairman in 2007 and for his contribution to the development of the company since his appointment as a non-executive director in 2000.”