Imperial Tobacco hit by cigarette supply problems

Imperial Tobacco warned today that its half-year cigarette volumes would be down 4% as it reported trading in line with expectations.

The world's fourth biggest cigarette maker, with brands including Lambert & Butler, West and Gauloises, said the half-year dip was caused by a supply disruption in the Middle East and market weakness in eastern European, the US and Spain.

The group said in a trading statement that it expected its volumes to stabilise year-on-year in the second half of the 12 months to the end of September.

Despite the downturn, Imperial has been able to raise cigarette prices since last September to help offset the impact of increasing tobacco leaf costs.

Imperial's chief executive, Gareth Davis, is retiring in May and will be replaced by his deputy, Alison Cooper. Davis and Cooper worked on Imperial's deal to acquire the Franco-Spanish firm Altadis in January 2008 for 12.6 billion, which added brands such as Gauloises and Fortuna to its portfolio.

The group was reporting on its half-year trading and will release first half results to the end of March on 27 April.