Tough economic conditions in Europe and illicit trade in cigarettes contributed to a 4.2% fall in first-half turnover at Imperial Tobacco, the company said today.

Imperial made £13.38bn in the six months to 31 March, with adjusted operating profits down 6.5% to £1.43bn. The company, which makes Lambert & Butler and Golden Virginia tobacco, had warned in January that its first-half operating profits would be lower than the same time last year.

“We delivered some good performances across our core total tobacco portfolio in what has been a challenging first-half operating environment, achieving further growth from our key strategic brands, fine cut tobaccos, premium cigars and smokeless products,” Imperial said in a statement.

“However, this has been offset by factors that have impacted our overall performance, including worsening economic conditions in the European Union which have resulted in significant market size declines, with higher levels of illicit trade.”

In the UK, Imperial reported sales down 0.4% at £467m, while adjusted operating profits grew 6%. The company said it estimated overall UK market volumes were down by 7% with cigarettes down 10% and fine cut tobacco up 1%.

Analysts Investec said Imperial’s first-half results were in line with expectations but that “under the hood, the question marks persist”. “Volume performance is decelerating, price/mix is weak relative to the industry and market share being lost in more markets than it is being gained.”