Imps up despite war on smuggling

Paul Armstrong12 April 2012

IMPERIAL Tobacco has provided evidence that Britain is making progress in its battle against smuggled cigarettes. The country's largest cigarette seller said the number of UK duty-paid smokes sold in the past year had risen about 5%, while the total UK market had shrunk by 7%,

The rise in annual consumption of UK duty-paid cigarettes to about 58bn helped power Imperial to a record half-year pre-tax profit of £261m, up 17%. But chief executive Gareth Davis said the smuggling fight had cost Imperial the sale of many cigarettes that would have returned to Britain illegally.

Much domestic expansion was at the lower end of the market, where demand grew for the Lambert & Butler and Richmond brands. Imperial had 43% of the market, up four percentage points from a year ago. This, combined with growth in trendier brands such as Marlboro Lights, generated an 11% rise in Imperial's British operating profit to £170m in the year to the end of March. Profit at the international division rose 16% to £140m.

Earnings per share rose 13% to 35.4p. That excludes the impact of the £1bn rights issue to help fund the £3.5bn purchase of Reemtsma in Germany. The dividend is up 11% at 12p a share.

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