Imperial Tobacco declared that it didn’t want to face the repeat of the unpleasant situation that caused profit damaging price wars in Spain this year, as it presented its annual revenues in conformity with analyst’s expectations. Cigarette net earnings grew 2% but, if the influence of Spain and a change to UK trade buying patterns were excluded, fixed tobacco net profits increased 4.5 %, according to the company’s representative.

Alison Cooper, Imperial Tobacco’s chief executive, spoke about the cumulative effect of Spain’s ban on smoking in public places, which took effect in January, she added that growth in excise taxes and the severe macroeconomic conditions caused a “perfect storm”. She also said: “I would debate it was rather unique what concerns its extremity because of the comparative brand positioning in particular market and versus other markets in the world.” Imperial reduced its prices at the beginning of this year in order to compete with rivals as the overall market in Spain decreased from 80bn cigarette equivalents in 2010 to about 69.2bn in 2011.

The company raised prices again in July that was considered a positive move ending the price war and Ms. Cooper stated that prices were “currently behind at least at the same level or above where they were present before the given activity started in the Spanish markets.” Mss Cooper said that for instance in euro zone, where economic disorder made some customers to replace their favorite cigarette brands with less expensive, was not a great shift in sales patterns.

As Greece fights to introduce severe measures, sales of luxurious cigarette line Davidoff had “suspended incredibly well” in the country. Mr. Cooper also acknowledged that this was “a real surprise” because, “you would see consumers to be seeking value in Greece”. She added: “This is tobacco and it is irrepressible in this economic environment and we provide portfolio for consumers where they are looking for value.” Full pre-tax profits for the whole year constituted £2.15bn that is higher than £2.1bn in 2010, a 1.7% raise that corresponded to analysts expectations. The dividend payment was somewhat higher than forecasted at 95.1% per share, up by 12.8%. According to latest information Imperial Tobacco shares closed up 1% at £22.75 thus making it one of the seven risers on the FTSE 100.

By Sara Norton, Staff Writer. Copyright © 2011 Cigarette-Store.org. All rights reserved.