Britain’s Imperial Tobacco, the maker of Lambert & Butler and Gauloises cigarettes, issued a profit warning today for the first half of its financial year and blamed the poor economic outlook in Europe.
“Given our ongoing investment and the European market pressures we expect first half adjusted operating profit to be down year-on-year,” Imperial said in a trading update.
“Our full year results remain in line with our expectations, reflecting the benefits from an acceleration of a cost optimisation programme designed to fund our continued investments and offset the current European market pressures.”
The London-listed group also added that total revenues grew by two per cent in the group’s first quarter, or three months to December, compared with the same period of 2011.
“The macro environment continues to be challenging; towards the end of the first quarter and into January, market trends have worsened in a number of key markets including the EU and Russia,” it said.
“In the EU we estimate that the legal stick equivalent market size is currently down around 5 per cent with the legal cigarette market size down around 7 per cent.”
Alison Cooper, Chief Executive added that emerging markets were helping to offset difficult the European trading conditions.
“The growth momentum in key markets in Africa and the Middle East and Asia-Pacific is being offset by the current adverse market dynamics in Europe, with increasing levels of illicit trade,” Cooper noted.
“This reinforces the importance of our two focus areas for 2013: further investing behind our key total tobacco assets and geographies; and accelerating our cost optimisation programme, providing funds for investment and mitigation for the full year given the current European environment.”