Imperial Tobacco Annual Profit Little Changed Amid Price Hikes

Imperial Tobacco Group Plc, Europe’s second-biggest tobacco company, said full-year profit was little changed as the maker of Davidoff cigarettes increased prices to combat falling shipments in Europe.

Adjusted operating profit was 3.18 billion pounds ($5.1 billion) in the 12 months ended Sept. 30 from 3.16 billion pounds a year earlier, the Bristol, England-based company said today in a statement. That compares with the 3.19 billion-pound average estimate of 12 analysts surveyed by Bloomberg.

Imperial Tobacco shares have fallen almost 3 percent this year compared with an 11 percent gain for the MSCI World Tobacco Index, held back partly by the company’s lack of an electronic cigarette offering or other nicotine replacement products, according to Berenberg Bank analyst Erik Bloomquist. Imperial agreed to acquire Dragonite Ltd.’s electronic cigarette unit in September for $75 million.

The company forecast “modest” 2014 earnings per share growth at constant rates of currency exchange and that it will increase its dividend by at least 10 percent.

Investor sentiment toward Imperial Tobacco has been weighed down by concern that e-cigarettes will continue to encroach on traditional cigarettes in mature markets, Bloomquist said.

Rival British American Tobacco Plc (BATS) this year introduced its own e-cigarette, called Vype, in the U.K. and is awaiting approval for an aerosol-based nicotine delivery device that could go on sale in the country as soon as next year.

Philip Morris International Inc. (PM) plans to sell cigarettes which heat, rather than burn tobacco in another four years. It also has plans for more traditional e-cigarettes.

To contact the reporters on this story: Gabi Thesing in London at gthesing@bloomberg.net; Matthew Boyle in London at mboyle20@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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