Imperial Tobacco Repeats Full-Year Goals After ‘In Line’ Quarter

Imperial Tobacco Group Plc, Europe’s second-biggest tobacco company, repeated full-year targets for earnings and dividend growth and said it will step up investment in quality.

Earnings per share at constant exchange rates will show a “modest” increase, while the dividend will be raised at least 10 percent, the Bristol, England-based maker of Davidoff and Gauloises Blondes said in a statement today. Imperial also said underlying net tobacco revenue rose 1 percent in the first quarter to about 1.6 billion pounds ($2.7 billion).

The shares have dropped about 8 percent since mid-November, weighed down by a combination of the U.K. considering the introduction of plain packaging, Europe struggling to bed down the economic recovery and Imperial’s lack of an electronic cigarette or other nicotine replacement product.

The company will step up “investments behind quality growth,” Chief Executive Officer Alison Cooper said in the statement, without being more specific. First-quarter results were “in line with our expectations.”

Imperial Tobacco said Nov. 5 it will introduce two e-cigarette products this year, catching up with rival British American Tobacco Plc which 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 this year.

The company’s traditional cigarette business is also under pressure, particularly in the U.K., its main market, which accounts for about 20 percent of group profit. The smoking rate in England has dropped below 20 percent, probably the lowest in 80 years, and the public may be more supportive of a tobacco ban than is generally thought, according to a study by University College London published on Feb. 12.

In November, the U.K. government reversed its position on plain cigarette packs for the second time in four months, announcing a review of how the policy is working abroad. Earlier this week, the government agreed to allow a ban on smoking in cars when children are present.

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