Imperial Tobacco predicts return to sales growth

The British company, which sells more than 340 billion cigarettes annually, reported that half-year earnings beat forecasts as it benefited from the ending of a price war in Spain and the unwinding of destocking in the United States and Ukraine.

“We’ll continue to maximise the many growth opportunities that our unique portfolio offers to create further value for our shareholders,” said chief executive Alison Cooper in a half-year results statement.

The Bristol-based group, which makes Lambert & Butler, Davidoff and Fortuna cigarettes, reported that adjusted earnings rose 5.3 per cent to 93.1 pence a share for the half year to the end of March. The half-year dividend increased 12.8 per cent to 31.7 pence a share.

It saw a return to sales growth in the first three months of 2012, with revenues increasing by eight per cent.

The £500m buyback follows a similar-sized scheme last year when the company promised dividends would grow faster than earnings to push its payout ratio to shareholders to over 50 per cent, after it paid down debts following its 2008 Altadis acquisition.

Imperial, like its bigger rivals Philip Morris, British American Tobacco and Japan Tobacco, has suffered from declining sales in mature markets but has offset this by raising prices and expanding into emerging markets.

Imperial, like these competitors, is seeing its cigarette sales and volumes slowly come back which has helped its shares to recover.