Imperial Tobacco Posts Profit on Higher Prices for Cigarettes
Imperial Tobacco Group Plc, Europe’s biggest tobacco company, posted a first-half profit after the maker of West, Davidoff and JPS brands increased prices.
Net income was 689 million pounds ($1.06 billion), the Bristol, England-based company said today in a statement. That compared with a year-earlier loss of 149 million pounds, which was caused by currency and interest rate hedging.
Imperial has increased prices and slashed costs and after the 2008 purchase of Altadis, the maker of Gauloises and Fortuna cigarettes, to lift operating profit. The quantity of cigarettes sold in the first six months slid 3.7 percent due to lower demand in the U.S. and Spain and amid a disruption to supply networks in the Middle East. That was less than the 4 percent drop Imperial Tobacco predicted last month. “We made gains with our global cigarette brands,” Chief Executive Officer Gareth Davis said in the statement. “We are focused on maintaining this growth momentum and are encouraged by the upward trend of our most recent cigarette shares in a number of mature and emerging markets.”
Imperial Tobacco shares have slid 0.7 percent this year, valuing the company at 19.8 billion pounds. British American Tobacco Plc, Europe’s second-largest and maker of Dunhill cigarettes, has added 8.8 percent this year.
Last year, Imperial Tobacco said it had “fair value” losses on derivatives used for hedging of 937 million pounds and amortization of 224 million pounds from acquisitions.
By Jeroen Molenaar, Businessweek