Imperial Tobacco sales hit by strong pound and Middle East turmoil

Imperial Tobacco company has blamed the strong pound and turmoil in the Middle East for the decline in cigarette sales during the fourth quarter.

Tobacco sales for the quarter slowed 4 per cent, even as volume growth of brands, Davidoff and Gauloises and revenue increased 11 per cent and 15 per cent respectively on the same period last year.

The company said further problems with the timing of pricing activity in a number of markets and the mixed impact of lower sales of mass market cigars in the US ahead of a brand re-launch also resulted in a decline in tobacco net revenue of 1 per cent on the same period last year to £1.5 billion.

Meanwhile, shareholders of the fourth-largest international tobacco group globally, approved  acquisition of US brands Maverick and Salem as also the e-cigarette brand Blu, subject to regulatory approval.

According to the company it expected to deliver further incremental savings of £85 million in 2015 through a number of initiatives that were reducing business complexity and it remained on track to save £300 million per annum from September 2018.

Imperial, along with other tobacco companies, faced falling sales in many markets as an increasing number of smokers cut down on tobacco due to cost and health concerns.

However chief executive Alison Cooper dwelt on the better performance of its growth and specialist brands, which now contributed to 60 per cent of sales.

She said volumes from growth brands were up 11 per cent and net revenue growth came in at 15 per cent.

"We delivered another strong performance from our growth brands,' she said. 'We continue to focus on our priorities for success in our growth . . . markets and are well advanced with our US integration plans.

"The US deal received overwhelming support from our shareholders and will further strengthen our platform for growth."

The first quarter figures did not factor the impact of a programme to ship fewer cigarettes to customers to help cut the build-up of stocks.

Imperial had reduced costs and shut factories in its core tobacco business, and recently launched two new products that did not use tobacco - a caffeinated mouth strip and a new e-cigarette.