Growth Brands continue to outperform the market with volumes growing 2% in total, 8% in Growth Markets. Six of the ten Growth Brands increased volume. Growth Brands were 43% of volume in Q1 (+3% points versus Q1 2013) and generated 39% of tobacco net revenue (39%).
Growth Markets increased tobacco net revenue by 3% and Returns Markets have been resilient, performing broadly in line with the industry with tobacco net revenue growth of 1%.
The Company made good progress with its stock optimisation programme and has significantly reduced trade inventories in a number of markets notably in
There has been no material change in the market environment compared to the expectation at the time of the Company's full year results in
"We continue to implement our strategy, strengthening the sustainability and quality of our sales growth. We are focusing on driving our Growth Brands and targeting opportunities in our Growth Markets, complemented by resilience in our Returns Markets. The quality of our business continues to improve with encouraging results from our Growth Brands which have outperformed the market. The quarter has also seen significant progress with our stock optimisation programme, reducing trade stocks and improving our flexibility and speed to market.
"These results are in line with our expectations. We will continue driving our strategy this year, stepping up our investments behind quality growth. There is further stock optimisation work to be done, whilst our cost optimisation programme is on track and will contribute towards our investment plans. A reasonable working assumption for the full year continues to be for modest growth in EPS at constant exchange rates and for at least a 10% increase in dividends."
Total volume performance at -5% was broadly in line with the industry, while there has been strong price/mix growth resulting in tobacco net revenue growth of 1%. Reflecting the success of the Stock Optimisation programme, total reported volume in the quarter was down 11%.
Growth Brands: Generating High Quality Growth
Growth Brand volumes grew 2% and tobacco net revenue grew 2%. Growth Brands did particularly well in Growth Markets, increasing volume by 8%. JPS grew strongly in
Specialist Brands: Total Tobacco Focus
Specialist Brand tobacco net revenue grew 1% with good performances from snus and both premium and mass market cigars, somewhat offset by fine cut tobacco due to declines in
Growth Markets: Maintaining Growth Momentum
Tobacco net revenue grew by 3% with strong growth in many markets, particularly in
Returns Markets: Resilient Performance
Tobacco net revenue grew by 1%, reflecting good performances in a number of our Returns North markets, including
Comparable performance has been good with sales ahead of last year adjusting for the timing of excise tax increases. Growth has come from the non-tobacco business, more than compensating for the impact of declines in tobacco volume.
Full Year Outlook
At the time of the Full Year 2013 results in November, the Company indicated that a reasonable working assumption for Financial Year 2014 was for modest growth in EPS at constant exchange rates, given the Company's commitment to increasing investment behind its growth strategy and implementing its stock optimisation programme to reduce trade inventories and deliver a shorter, more flexible route to market in a number of countries. There has been no change in the Company's full year expectation for modest EPS growth at constant exchange accompanied by at least a 10% increase in dividend.
Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is or may be a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied in any forward-looking statement. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement. As a result, you are cautioned not to place any reliance on such forward-looking statements. The forward-looking statements reflect knowledge and information available at the date of this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the Company for current or future financial years will necessarily match or exceed the historical or published earnings per share of the Company. This announcement has been prepared for, and only for, the members of the Company, as a body, and no other persons. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this announcement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.
Notes to Editors
In 2013, the Company realigned its geographic footprint into Growth Markets and Returns Markets and now manages markets based on the strategic role they play, rather than their geographic proximity.
Growth Markets are characterised by large profit and/or volume pools. We tend to have shares below 15 per cent and see considerable opportunities for share and profit growth over the long term.
Our main Growth Markets include the
In Returns Markets we have relatively large shares, mostly above 15 per cent. Our objective is to maximise profit, whilst actively managing our market share. Our main Returns Markets include
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A replay of the call will be available at www.imperial-tobacco.com from later today
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