Imperial Tobacco Reports Lower Profits for Q1

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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 top-selling tobacco products

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.

The cigarette maker, which gains nearly 70 percent of all its profits in developed markets, has been affected by severe price war in Spain, where the tobacco market has been deeply affected by tax increases, smoking ban and growing unemployment rates.

The price war came to an end in last months of 2011, however, Imperial Tobacco’s third largest market, by profits, after United Kingdom and Germany is still being impacted by a reduction of almost 10 percent per year as the Spanish economy seems to be going into recession amid growing euro zone crisis.

The company reported its sales also suffered when the United Nations imposed sanctions on Syria following the 10-month-long uprising, so Imperial Tobacco stopped shipping its tobacco products to Syria in May 2011. In addition, price increases in Ukraine and USA resulted in trade de-stocking.

Imperial Tobacco admitted its overall financial performance and operational results for the 2011/2012 fiscal year to October 1st, 2012 was in line with the company’s forecasts.

“Reaching the forecasted growth in our underlying sales momentum while proceeding performing cost and cash opportunities have been our top priorities in such that our business is well positioned to deliver additional values for the shareholders in the current year,” Alison Cooper, Imperial Tobacco chief executive, declared during the trading update meeting in advance of the annual shareholder conference.

Last November, Cooper gave an optimistic note for recovery of Spanish tobacco market and growth in developing markets, and stated that the tobacco company should benefit in 2012 thanks to its solid position in low cost market segment and as the leading fine cut loose tobacco manufacturer in the world.

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