Imperial Tobacco says annual profits soar 57%
Britain's Imperial Tobacco, the maker of Lambert & Butler and Gauloises cigarettes, said Tuesday that annual net profits surged 57 percent, boosted partly by a major cost-cutting drive.
Earnings after taxation soared to £1.
42 billion ($2.
27 billion, 1.
82 billion euros) in the 12 months to September, Imperial said in a results statement.
That compared with net profit of £905 million in the previous fiscal year, when its performance was hit by a large impairment charge.
Investors welcomed the results, sending Imperial shares up 2.
70 percent to 2,739 pence in morning deals on London's FTSE 100 index, which was up 0.
22 percent at 6,502.
However, Imperial's revenues fell 5.
8 percent to £26.
63 billion, and it warned of a challenging climate -- particularly in Russia where the sector faces taxation hikes and tighter regulation.
Annual cigarette volumes slid seven percent to 294 billion sticks, as a poor performance in Russia and Turkey eclipsed strength in the United States and Saudi Arabia.
"This has been a year of significant delivery by Imperial," said chief executive Alison Cooper in the earnings release.
"We've completed our stock optimisation programme and realised over £60 million of further savings through our cost optimisation programme.
"We've achieved what we set out to achieve, creating a stronger business in the process.
"Imperial has slashed its inventories under the ongoing destocking policy, which seeks to improve the group's performance and cut costs.
The efficiency drive is on course to deliver £300 million of savings per year by 2018.
Turning to the outlook, Cooper warned: "Trading conditions remain tough in many territories but the actions we've taken to enhance the quality and sustainability of the business have put us in a stronger position to drive growth and create sustainable value for our shareholders.
"Imperial added Tuesday that its $7.
1-billion deal to purchase key cigarette brands from Reynolds American and Lorillard would transform its US business.
The British company had agreed in July to purchase key cigarette brands -- including Kool, Salem, Winston and Blu, the best-selling e-cigarette in the United States -- as part of a proposed $27.
4-billion merger of the two US firms.
The brands will be acquired without any historic legal liabilities, which would remain with the combined Reynolds American group, Imperial added on Tuesday.
"The acquisition will be debt financed and is subject to regulatory and shareholder approval, which we expect to receive in the spring of 2015," it said.
"This is a key strategic investment for the group that will transform our USA operations, diversify our profit stream and create significant value for our shareholders.
© 2014 AFP