Europes second-largest tobacco company – Imperial Tobacco Group Plc reported a smaller decline in its nine-month net revenue in comparison to analysts estimates. The company said the improving European market helped offset a “significant deterioration” in Russia.
Imperial Tobacco Group reported a 1% sales decline to 4.75 billion pounds ($7.95 billion) over the nine months ended June 30th, beating projections for a 2% drop. The companys guidance of modest growth in adjusted earnings per share was kept intact.
Chief Executive Officer Ms. Alison Cooper said in a statement, cited by the Wall Street Journal: “Im pleased with the continued improvement in the quality of our sales growth.”
According to Imperials statement, “the market as a whole has slightly improved in the past quarter”. This made the company reaffirm its full-year projection and outlook for at least 10% dividend growth.
Imperial reported a significant sales decline Russia, although the Russian market accounts for only 8% of sales volume and 2% of profit.
The companys overall sales drop is considered to also be a result of the “turbulent situation” in the Middle East. The rise of Islamic extremism hurt demand in the region and respectively, the companys cigarette and tobacco sales in Iraq, which is one of the key growth markets of Imperial Tobacco Group.
One of the analysts, who work at Morningstar Inc. – Mr. Philip Gorham told Bloomberg: “The results are pretty good, and for now we are not overly concerned about Russia. The sales declines there are likely to reverse once the geopolitical situation calms down. We are very encouraged by the recovery in Europe, where Imperial is obviously much stronger.”
In July 2014 the company said it agreed to acquire several cigarette brands, including Winston, Kool and Salem from Reynolds and Lorillard in a deal estimated to $7.1 billion. The deal is considered a part of a planned $25-billion merger between the two companies.
Imperial Tobacco Group Plc added 2.09% to trade at 2 578.67 pence per share by 13:27 GMT in London, marking a one year change of +17.27%. The company is valued at 24.18 billion pounds. According to the Financial Times, the 11 analysts offering 12-month price targets for Imperial Tobacco Group Plc have a median target of 2 680 pence, with a high estimate of 3 000 pence and a low estimate of 1 900 pence. The median estimate represents a 6.10% increase from the last close of 2 526 pence.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
