Cigars were no doubt being lit in the boardroom of Imperial Tobacco this morning as a solid, if somewhat brief, trading statement allayed fears that the Davidoff cigarette maker might be suffering. Its shares have dropped nearly 7% in the last two months.
Sales were in line with the company’s expectations with revenues expected to be up 4% thanks to strong sales in Eastern Europe, Africa, Middle East and Asia-Pacific.
But weakness in Ukraine and Poland – along with trade sanctions against Syria – will see volumes fall 3%.
However, there was no mention of the display bans in the UK and proposed plain packaging, which the cigarette lobby have been shouting about for months.
We read Imperial’s (customarily brief) Q4 update as a solid result in a climate of low expectations in the market.
While Panmure Gordon said:
Imperial’s in line FY 2012 trading statement should come as a relief, given the degree of nervousness ahead of the statement. Revenue growth of c.4% for FY 2012 represents a decent acceleration from c.3% in the first nine months. Although the stick equivalent volume decline of 3% is slightly disappointing and indicates no improvement on the first nine month’s performance.
Oriel Securities added:
This is clearly positive given the size of the relative fall in the share price quarter to date [it has fallen 6.7% since the end of June]. The July-September quarter under performance leaves Imperial Tobacco’s valuation looking very attractive.