Imperial Tobacco Sees Weaker Volumes on Eastern Europe, U.S.
Imperial Tobacco Group said it sees a 4% drop in cigarette volumes in the first half of the year due to supply disruption in the Middle East and certain weak markets. In a trading statement, the company, however, confirmed that its overall performance and financial position for the year ending September 30 remain in line with the management’s expectations.
The UK-based company operates under two segments: tobacco and logistics. Its portfolio of products includes Golden Virginia, Montecristo, Gauloises West, Cohiba, Van Nelle, Davidoff and Rizla.
According to the company, its global strategic cigarette brands have performed strongly with increase in volumes witnessed in Davidoff and West. Gauloises Blondes’ volumes also grew after adjusting for the impact of temporary supply chain disruption in the Middle East.
The company expects that its first-half cigarette volumes will be down by around 4% due to this disruption and continued weak markets in certain Eastern European countries, the USA and Spain. Cigarette volumes are expected to stabilize in the second half, compared to the same period last year, it added.
Imperial Tobacco had said in an interim management statement last month that it made a good start to the new financial year, with trading in line with the board’s expectations, despite weak economic environment. At that time, the company said its first-quarter cigarette market volumes in Spain were down about 10%, while the drop was 2% in Germany. French cigarette market volumes in the quarter grew 3%, while it declined 9% in the U.S.
The company said today that its fine cut tobacco business performed well with first-half volumes expected to be up around 10% as the UK, Germany and Central European markets performed particularly well.
The impact of increase in leaf costs has been offset by price increases in several markets since the financial year began, the company noted.
”We expect our working capital to follow its normal pattern with a significant outflow in the first half followed by an unwinding in the second half. For the full year we expect our cash conversion to be between 90% and100%,” the company said.
The company said in November 2009 that its attributable profit in fiscal 2009 increased to GBP 663 million from GBP 428 million in the prior-year period. On a per share basis, earnings advanced 30% to 65.3 pence from 50.4 pence earned in the previous year. Annual revenues grew 29% to GBP 26.5 billion from GBP 20.5 billion reported in the year ended September 30, 2008.
Imperial Tobacco is scheduled to report its results for the half year ending March 31 on April 27.
ITYBY.PK settled Monday at $61.70, compared to the prior close of $60.86, on 12,100 shares.
IMT.L closed Monday’s regular trade at 2,050 pence, up 19.00 pence or 0.94%, on 1.72 million shares.
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