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Gauloises Maker Plans to Increase its Dividend by 10%

Imperial Tobacco reported it would increase its dividend by around 10 % in the upcoming year, demonstrating confidence that cost reductions will assist it to deal with poor consumer spending and larger taxes that affected its annual revenue.

 

The same as all cigarette manufacturers, Imperial has been struggling with decreasing sales in several markets, as more people stop smoking. On top of that, fragile economies and government tax boosts are making cigarettes less affordable, resulting in lower-priced cigarette brands increasing in popularity.

 

Imperial, whose cigarette brands include well known Davidoff and Gauloises, has handled this by reducing costs, including closing factories, leading to over 60 million pounds of savings in the year. It explained it was on course to save about 300 million pounds annually by 2018.

 

Davidoff maker stated it planned to increase its dividend by about 10 % for its new fiscal year (2014/15), right after a 10 % improve for the year to September 30.

RBC Capital Markets expert stated the dividend objective was “a sign of Imperial’s confidence in its debt road.”

 

The company’s shares increased by 3 % at 2,747 pence at 1116 GMT on Tuesday, the major gainer in the FTSE 100 index , demonstrating the interest of big cigarette companies and their large dividends in times of unsteady markets.

Shares of greater competitor British American Tobacco (BAT) increased around 1.3 %, while the FTSE 100 index remained unchanged.

The world’s fourth giant international cigarette maker reported net profit in its tobacco business dropped by 6 % to 6.58 billion pounds in the fiscal year. As of October 10, industry experts on average were anticipating 6.97 billion, based on a company-compiled agreement.

 

Not including foreign exchange rates and the effect of a stock optimization programme that deliberately decreased inventories in a number of markets, underlying profit boosted by 2 %.

 

Volume, which determines the quantity of tobacco sold, dropped 4 %, which the company explained was in accordance with that of its entire markets.

 

“Trading factors keep on being challenging in numerous regions however the steps we have taken to improve the quality and sustainability of the business have set us in a tougher position to generate growth and produce sustainable value for our shareholders,” Chief Executive Alison Cooper explained.

The company is planning to purchase the Maverick and Salem cigarette brands, and blu, the top U.S. e-cigarette brand, for $7.1 billion to relieve passage of Reynolds American’s $27.4 billion purchase of Lorillard.

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