Imperial Tobacco predicts 3% revenue rise

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Commentary Number 2 Extract

Imperial Tobacco predicts 3% revenue rise

By Christopher Thompson and Rose Jacobs

Published: September 22 2010 09:02 | Last updated: September 22 2010 21:04

The struggle to sell cigarettes to budget-conscious customers continues for , which said that full-year volumes would be 3 per cent lower than last year – in line with trends laid out in July.

In a trading statement ahead of full-year results in November, the world’s fourth-biggest cigarette company said net revenues from tobacco would rise by 3 per cent this year, from last year’s $6.8bn, in line with management expectations.

The Davidoff and West brands saw volume growth, as did loose-cut tobacco: full-year volumes of which Imperial forecast would be 6 per higher than last year’s 25,950 tonnes.

But volumes of cigarettes are expected to fall more than 4 per cent, dragging down “white stick equivalent” volumes – which encompass cigarettes and loose-leaf tobacco – by 3 per cent, from 358.8bn last year.

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That compares with management expectations in July of a 3.1 per cent decline. The suggestion of a slight improvement in volumes in the fourth quarter provides some succour to shareholders.

In March, Imperial’s stock tumbled after UBS said earnings growth was set to slow and warned that consensus forecasts for next year looked too high. UBS argued that Imperial was running out of cost savings from its purchase in 2008 of Altadis and remained hamstrung by debt.

Shares in Imperial rose 32p on Wednesday to close at £19.25.

Chas Manso, analyst at Evolution Securities, said the statement was welcome after ...

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