Imperial Tobacco Annual Profit Climbs 8.5% on Africa and Asia
Nov 27, 2006, 17:25
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Imperial Tobacco Group Plc, Europe's second-largest cigarette maker, said annual profit rose 8.5 percent as smokers switched to brands including Davidoff, helping to raise African, Asian and Middle East market share. Net income climbed to 851 million pounds ($1.6 billion), or 121.6 pence a share, in the 12 months ended Sept. 30, from 784 million pounds, or 108.1 pence, a year earlier, the Bristol, England-based company said today in a Regulatory News Service statement. The median estimate for annual net income from seven analysts surveyed by Bloomberg was 850 million pounds. Tobacco companies have expanded in places including Russia and Taiwan as higher taxes, advertising prohibitions and smoking bans weigh on consumption in western Europe. Imperial, which sells its goods in more than 130 countries, sold 13 percent more cigarettes in its first half in Africa, Asia and the Middle East as people opted for brands including Horizon and Excellence. "Markets are becoming more open to competition," Michael Smith, an analyst at JPMorgan Chase & Co. in London who includes Imperial among his three favorite tobacco stocks, said before the earnings were published. "Cigarettes are a conspicuous consumption item and an affordable way to demonstrate increasing wealth and status." Operating profit rose 5.7 percent to 1.31 billion pounds, missing the analyst survey's 1.36 billion-pound estimate. Sales excluding tax increased 1.2 percent to 11.68 billion pounds, said Imperial, which controls almost half of the U.K. cigarette market with brands including Lambert & Butler. Imperial shares fell 15 pence, or 0.8 percent, to 1,839 pence in London yesterday. They have climbed 15 percent in the past year, matching the performance of the five-member Bloomberg Europe Tobacco Index. The company, which sells its goods in more than 130 countries, has a market value of 12.5 billion pounds. More than 20 European Union countries enacted bans on most forms of tobacco advertising in time to meet a 2005 deadline. European countries including Italy and the Irish Republic have forbidden smoking in public places. A ban took effect in Scotland in March, and similar measures will be put in place next year in England and Northern Ireland. Imperial, like competitors, has raised prices as cigarette taxes have increased. It's also eliminating jobs in Europe to help reduce costs. The company in July unveiled plans to close U.K. and German plants, costing 415 jobs. The cigarette maker's rivals include British American Tobacco Plc, which sells its products in 180 countries. Third- quarter profit rose 0.9 percent, the slowest quarterly pace in a year, as Japanese and German smokers bought fewer packs of Lucky Strike cigarettes, BAT said Oct. 26. Imperial is selling fewer cigarettes in the U.K. and Germany, markets that bring in more than half of operating profit. Imperial raised its full-year dividend payout by 11 percent to 62 pence a share.
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