Imperial measure of success as sales and profits increase

Imperial, whose cigarette brands include Davidoff, Gauloises, JPS and West, said yesterday that cigarette volumes in its October-March first-half period were expected to fall 4 per cent, with price rises helping sales to see growth.

The Bristol-based company said its financial performance was in line with its expectations for its 2011/12 year to September, as it prepares to announce first-half results on May 1.

The group, which sells over 340 billion cigarettes annually, had already said sales fell 1 per cent and volumes were down 7 per cent in its first quarter due to a tough Spanish market, Syrian sanctions and destocking in Ukraine and the United States.

“Following a first quarter impacted by various external factors, we delivered strong revenue and profit growth in the second quarter, improving our revenue and profit momentum as we enter the second half,” the trading update said.

Imperial shares were up 2.1 per cent yesterday after they had rallied around 14 per cent since hitting a low of 2,213 pence in late January, just before its first quarter trading update.

Analysts said the one-off factors which hit Spain, Ukraine and the US in Imperial’s first quarter were unwinding, as the Spanish market recovered from 2011’s price war and destocking in Ukraine and the US diminished, but it was still being hurt by the United Nation’s sanctions on Syria since May 2011.

They added momentum was building for the second half, but most analysts left their forecasts unchanged with Martin Deboo at Investec Securities not expecting to materially change his forecast earnings of 201.8p a share for the year to September 2012, up 7.7 per cent from 187.4p the previous year.