Imperial, the world fourth biggest cigarette maker, revealed an 8% increase in full year pretax profits to £1.17bn. Total revenue rose 4% to £11.67bn with revenue less duty edging ahead 1% to £3.16bn. Cigarette volume increased 7% to nearly 187bn
Adjusted earnings per share increased 9% to 122.2p and there is a final dividend of 43.5p, giving a total of 62p for the full year, up 11% on last times.
Organic growth was particularly good and despite a slightly mixed absolute performance across key regions, the group managed to increase market share in all territories including the UK.
Its premium cigarette brand Davidoff put in a especially strong performance, increasing volumes by 6% to 14bn. Among other brands, West and JPS notably provided further, solid support.
Across its key markets, the UK delivered an 8% increase in operating profits to £506m despite cigarette volume falling 2% to 23.4bn, with price increases more than offsetting volume decline. Market share increased 1% to 45.5%.
On the outlook for the UK, Imperial says it does not expect smoking bans to have significant long-term effect on its business. It believes smokers will continue to choose to smoke regardless of regulations and the group says this view is supported by its experiences in other markets.
Elsewhere, Germany remained a tough nut, with volume there falling to 20.7 from 20.9 and adjusted operating profits declining nearly 7% to £274m. The performance reflects challenging trading conditions, with Imperial estimating that the overall German market for tobacco declined 6% over the year. The cigarette market alone fell a hefty 9%. .
Performance across the Rest of Western Europe was modest. Despite volume rising 13.6% to 20.1bn, adjusted operating profits slipped £2m to £324m, as smoking bans in Spain and Belgium, stiffening competition in the fine cut tobacco market, and declines in travel retail combined to make life a little difficult.
The Rest of the World region, covering more than 100 countries, delivered a good performance, with adjusted operating profits up nearly 21% on volume ahead 9% to 122.7bn.
Good performances in Asia, Eastern Europe (including Russia) and Africa helped offset a challenging trading environment in Central Europe where countries have been ramping up duty to bring them into line with EU minimum excise rates.
Overall, and as expected, a slightly mixed performance over the year. More broadly there was impressive progress with improving efficiency across the business, partly through rationalisation. Cigarette unit costs were reduced by 6% while overall productivity increased 6%.
The group's very able management assures shareholders that the business remains well placed to deliver further organic growth.
The shares have had a decent run over calendar 2006, having risen just over 6%. They were particularly perky just ahead of today's results, having gained 4% over October and briefly hitting an all time high of 1855p last week.
Today's robust, in line numbers and confident outlook, especially with regards to prospects in the UK as next year's smoking ban for England and Wales nears, helped Imperial Tobacco Group Plc shares rise 7p by midday to 1846. That gives a forward 2007 PER of 14 and a prospective yield of 3.6%.
