Imperial Tobacco Starts to Deliver U.S. Acquisition Progressby
Brands bought from Reynolds `performed well' in last quarter
`Excellent' progress made on integration of Winston, Salem
Imperial Tobacco Group Plc reported full-year earnings that beat analysts’ estimates as the market share of its recently-acquired U.S. cigarette brands stabilized in the fourth quarter.
Adjusted operating profit gained 2.4 percent to 3.05 billion pounds ($4.7 billion) in the 12 months through September, the Bristol, England-based company said Tuesday. The average of 13 estimates compiled by Bloomberg was 2.96 billion pounds. Brands bought this year from Reynolds American Inc., which include Winston and Salem, “performed well” in the fourth quarter and “excellent" progress was made on their integration, Imperial said.
“That’s delivering on what they needed to do,” Erik Bloomquist, an analyst at Haitong Securities, said by phone. “Had they not done that, it would have been concerning.”
Investors are pinning their hopes for growth on Imperial’s ability to revive the fortunes of the U.S. cigarette brands it acquired for 4.6 billion pounds from Reynolds, which it says suffered from a lack of investment under their previous owners.
Overall sales remain in decline, as economic sanctions in Syria and conflict in Iraq disrupt the company’s distribution channels, issues which it said will continue to weigh on first-quarter shipments. Cigarette volumes shrank 5.6 percent, with the Middle East responsible for more than half of that drop.
The decline in sales hasn’t affected the growth in shareholder payouts. Imperial proposed a 10 percent increase in its dividend for the year and reiterated its plan to maintain increases at or above that level in the medium term.
Chief Executive Officer Alison Cooper said she’s “comfortable” with analysts’ estimates for sales and earnings this year, speaking on a conference call with reporters.
The stock rose 0.7 percent to 3,520 pence as of 10:13 a.m. in London.