- Tobacco maker sees Winston, Kool boosting results this year
- Unrest in Iraq and Syria contributes to 9.1% volume decline
Imperial Brands Plc, the U.K. cigarette maker that recently dropped the word "tobacco” from its name, said its newly-acquired U.S. brands should boost full-year results.
The four U.S. brands that Imperial acquired as part of the $27 billion merger of Reynolds American Inc. and Lorillard LLC last year will benefit from increased visibility at U.S. retailers, the maker of Davidoff cigarettes said in a statement Thursday. Excluding those brands, net revenue from tobacco rose 2 percent in the quarter ending Dec. 31, it said. That’s an improvement from a 1 percent decline in the year-ago period.
“The company’s organic growth is a solid performance and encouragingly the market share of the U.S. brands is stable,” Erik Bloomquist, an analyst at Haitong Securities, said by phone. The shares were little changed at 3,516 pence at 8:50 a.m. in London.
Bristol, England-based Imperial paid 4.6 billion pounds ($6.7 billion) for the U.S. brands, which include Winston and Kool, in a bid to gain a foothold in the world’s second-biggest tobacco market, as its U.K. sales are threatened by plain packaging legislation that’s scheduled to take effect in May. The acquired brands contributed 226 million pounds in revenue this quarter, the company said.
As Imperial integrates those brands, its share price has risen to a record amid speculation that rival British American Tobacco Plc may be preparing a bid for the company.
Excluding the U.S. business, volumes fell 9.1 percent in the first quarter, which the company mitigated through price increases. Conflict in Iraq and the complete cessation of trading in Syria amid a civil war in the country accounted for almost half of the decline. The company expects this impact, which was a headwind for most of last year, to tail off during the second quarter.