Imperial Tobacco Reports Earning Growth, Matching Expert Forecasts

Imperial Tobacco Group, the second-largest tobacco group across Europe, reported its earnings grew in the first half of the financial year, matching experts’ forecasts, after increasing prices on its cigarette brands in United Kingdom, its biggest market.

After adjustment operating profit added 3 percent to 1.52 billion pounds (approximately $2.5 billion) during the six months to March 31, the UK-based maker of Davidoff, West, Gauloises Blondes and other brands said earlier this week.

Imperial Tobacco holds strong leadership position on the U.K. tobacco market, with profit going up by 9 percent after price in October and March. Sales volume grew by 6.5 percent as some cigarette smokers turned to less expensive brands, like JPS Silver and Windsor Blue, or to loose tobacco.

In the U.K., which currently faces its first double-digit recession since the 1970s, the company saw sales rise by 12 percent even despite overall cigarette market was down by 2 percent. Imperial Tobacco holds nearly 45 percent of cigarette market in Britain.

Decreasing Volume

The switch by smokers to less expensive brands resulted in a reduction in Imperial Tobacco’s operating profit margin in the United Kingdom to 65.5 percent down from 67.2 percent in the previous year. However, CEO Alyson Cooper admitted they expect the margin to widen during the second half of the current financial year.

The overall amount of cigarettes sold by Imperial Tobacco was down by 1 percent during the second quarter, still going up from a 7 percent drop reported in the first quarter, three months ago.

What takes Spain, which declared earlier this week it had fallen into the second recession since 2009, the company increased its leading market share by stronger sales of Fortuna cigarette brand, Cuban cigars and loose tobacco. These were the positive news from Spanish market, which according to the industry analysts is expected to contract by nearly 9 percent this year.

Developing Markets

In addition to increasing prices, cigarette makers are turning to emerging markets in order to offset decreasing sales and growing taxes across European Union and North America.

Imperial Tobacco Chief Executive Officer admitted she was happy with the sales in Ukraine, Russia and Taiwan.

In the meantime, Australia has adopted legislation, contested by leading tobacco corporations, obliging all cigarette brands to be sold in plain packages from December. The U.K. government is considering the same measure, Cooper named an unnecessary decision, not backed by any credible evidence.

Volume for the group’s leading brand, Gauloises Blondes, grew 11 percent during the six-month period, contributed by strong sales in North Africa and the Middle East.

Roll-your-own cigarette tax angers tobacco retailers

Tobacco store owners claim their business would be affected dramatically if Washington lawmakers, desperate to cover $1 billion hole in state budget, would increase taxes for roll-your-own cigarettes.

Supporters of the tax hike say it would close a loophole that unfairly benefits to tobacco-rolling machine industry.

The rolling machines allow smokers roll their own cigarettes using loose tobacco and wrapping paper in cigarettes in nearly 10 minutes, at half price of pre-packaged cigarettes. That’s partially because state excise taxes – 15 cents per every cigarette – are not implied to the roll-your-own cigarettes.

Charles Bertrand runs two Tobacco shops in Washington and says that in case roll-your-own products will be taxed as conventional cigarettes he would have to shut down the business, as people will stop buying do-it-yourself tobacco products.

He admits less expensive alternatives are vital for the customers.

“Most of people coming here are low-income and elderly, they really believe that roll-your-own machines are a blessing for them,” Bertrand said.

However, supporters of increasing the tax on do-it-yourself cigs state the lawmakers should think about public health and fairness.

(more…)

Cigarettes to Vanish From Store Shelves across England This Week

Packs of cigarettes and other tobacco products will be removed from the shelves in the supermarkets across Great Britain from Friday, as the latest legislation prohibiting their display in shops enters into effect.

Tobacco products will be stored hidden in closed shelves or under the counter according the stringent anti-smoking regulation implemented in England.

The measure obliges all supermarkets and large stores to remove cigarette displays at the points of their sale with allowed temporary displays under “particular limited circumstances”.

The law’s implementation was postponed until April 2015 for small shops, newsagents and tobacco stores in order to give them enough time to re-designate their venues.

Lawmakers claim that banning tobacco from displays will help to discourage teenagers and young adults from taking up smoking habit.

(more…)

Altria looks to capture different tobacco consumers with new products

Currently many cigarette smokers are getting more interested in trying various tobacco products besides cigarettes, than previous generations of smokers, and Altria Group Inc, parent company of the largest cigarette maker, Philip Morris USA, is looking on their recently-launched products to lure customers who are open to new products, according to the company.

The corporation, best-known for marketing the iconic Marlboro cigarettes, as well supported its profit forecast, published in January.

Altria, which also markets Copehnagen and Scoal smoke-free tobacco products and Black & Mild cigars, has witnessed a change in tobacco consumption patterns in the USA. Whereas the rate of cigar and cigarette smokers has been virtually unchanged, the consumption of smokeless tobacco has been growing.
Nevertheless, Marlboro – with roughly 42 percent share of the U.S. cigarette market – remains the leading brand in the group’s portfolio.

At the same time, many smokers have admitted to be trying new “reduced-risk” tobacco products, like snus and other smoke-free tobacco, due to health growing concerns and social stigma.

(more…)

Experts forecast Marlboro, Philip Morris USA Q4 Performance

On the threshold of the annual financial report, presented by Altria Group, owner of Philip Morris USA, leading industry analysts forecast its performance during the fourth quarter of the year, basing on its Q3 results.

Since adult Americans reduce their expenses on tobacco products, due to growing taxes, and increasing social stigma on smoking, the largest cigarette maker in the United States reported drop in shipping volumes, but confirmed it still managed to obtain revenue growth through increase of organic cigarette prices during its earning conference pre-call.

Industry experts predicted that the company’s leading brand, Marlboro could retain its market share, thanks to the recently introduced Marlboro Leadership Price, though the brand has lost 1% of market share in the previous quarter, totaling 41.7% of the US cigarette market. In addition, the market share of its other key brands, including Parliament and Virginia Slims, went down as well.

The drops in Marlboro market share affected the overall number of cigarettes sold by the company during the quarter, which dropped by 9% to equal 33.3 billion cigarettes versus the same period a year before. Yet, Philip Morris USA’s discount cigarette brands, including L&M were up by 9.5%.

(more…)

Imperial Tobacco Reports Lower Profits for Q1

Highlights of Imperial Tobacco Profit Report:

• Revenues during the quarter from October to December 2011 were down by 1 percent
• Cigarette equivalent sales volumes dropped 7 percent
• Overall financial performance considered in line with the company’s expectations

Imperial Tobacco, Bristol-based, fourth-leading tobacco company in the world, published its profit report for the first quarter of the financial, reporting sales were down by 1 percent during the three months from October to December, due to difficult economic situation in Spain, sanctions in Syria and de-stocking in the USA and Ukraine.

The British tobacco corporation, which markets such brands as Davidoff, West, Gauloises Blondes, JPS, Lambert & Butler, Classic, Gitanes, Prima and others, stated last week that if eliminating the influence of the latter four markets, total sales grew 3 percent during the quarter.

Imperial Tobacco admitted the cigarette equivalent volumes, among which are fine cut tobacco brands, like Golden Virginia, dropped by 7 percent, whereas the underlying picture showed volumes decrease of 1 percent.

(more…)