Nov. 10 (Bloomberg) -- Imperial Tobacco Group Plc said Chief Executive Officer Gareth Davis will retire after more than 37 years with Europe’s second-largest publicly traded cigarette company.

Davis, 59, will be succeeded by Alison Cooper, currently chief operating officer, when he retires in May. Cooper, 43, joined Bristol, England-based Imperial in 1999 after previously working for PricewaterhouseCoopers LP. Imperial also reported a 55 percent gain in full-year profit today. The stock rose as much as 3.9 percent in London trading.

Cooper will have an “enhanced focus on sales growth,” while continuing to look at costs, she told journalists on a conference call today. Under Davis, Imperial made acquisitions including Germany’s Reemtsma and Spain’s Altadis SA. He also bought Commonwealth Brands, Imperial’s first foray into the U.S., after judging the legal risk from government tobacco settlements had subsided sufficiently.

The appointment “will be well-received by the market,” analyst Tina Cook at Charles Stanley in London said by phone. “She has quite a bit of experience.” Cook has an “accumulate” rating on the stock.

Cooper joins Reynolds American Inc. CEO Susan Ivey as a female top executive of one of the world’s top cigarette makers. She was previously a financial controller at Imperial, and was named Chief Operating Officer earlier this year.

Share Price

Imperial Tobacco shares rose 42 pence, or 2.3 percent, to close at 1,870 pence in London, giving the company a market value of 19 billion pounds ($28.4 billion). The stock has gained 1 percent this year, behind the 10 percent growth by larger rival British American Tobacco Plc.

Davis, who was appointed CEO in 1996, is one of the few tobacco company leaders to still dispute the link between cigarettes and cancer. He said in a 2005 court case that proof smoking causes lung cancer couldn’t be established beyond doubt.

He joined Imperial as tobacco companies began to put health warnings on packs, and is leaving after the U.K. banned smoking in public places and is considering banning advertising at the point of sale. That could force retailers to hide their tobacco packs from public view.

“I will have been at the helm for 14 years,” Davis said on the call. “I think the time is right for me to move on.” Davis had previously said he would retire at the age of 60.

‘Very Confident’

Net income rose to 663 million pounds ($1.1 billion) in the year ended Sept. 30, compared with 428 million pounds in the year-earlier period, the company said. So-called adjusted pretax profit increased 39 percent to 2.23 billion pounds, beating the 2.21 billion-pound median estimate of analysts surveyed by Bloomberg. Sales climbed 29 percent to 26.5 billion pounds.

Imperial, which has cut jobs and closed plants to reduce costs, said in the statement it is “very confident” of achieving its target of 400 million euros ($560 million) of cumulative synergies by the end of its 2012 fiscal year.

The “earnings numbers and debt are both better than the market had been anticipating,” Rae Maile, an analyst with JPMorgan Cazenove Ltd. in London, wrote in a note to clients.

The company plans to pay a final dividend of 52 pence per share, giving a total payout of 73 pence for the full year, up 16 percent on the prior year. Imperial plans to return to its “ordinary” dividend ratio in the “next couple of years,” Davis said on the call.

To contact the reporter on this story: Louisa Fahy at lnesbitt@bloomberg.net

Last Updated: November 10, 2009 14:29 EST