Alison Cooper, CEO of Imperial Tobacco, said cigarette and tobacco sales in Germany were “excellent,” despite the EU’s economic weakness, which hit the British multinational’s half-year profits.
“We are growing cigarette share, we are growing fine-cut share, and not just at the value end of the market. We have seen growth at the top-end in brands such as Davidoff and Gauloises,” Cooper told CNBC.
“We have seen excellent performance in that market,” she added.
However, Imperial Tobacco, the world’s fourth-largest cigarette company, said volumes were hit by difficult trading conditions in the broader EU, from where it makes two-thirds of its earnings.
Revenue in the six months leading to March 31 stood at £13.4 billion ($20.8 billion), down 4.2 percent on the previous year’s £14.0 billion. Operating profit was down 9.7 percent at £1.2 billion.
“The performance reflects the weak consumer environment across Europe, challenging competitive situation in the U.S. and the need to step up investment behind its key brands,” said Damian McNeela and Graham Jones, analysts at Panmure Gordon, in a research note released after the earnings announcement.
Cooper said revenues from key strategic brands, fine-cut tobaccos and snus (similar to American dipping tobacco) had increased, with improved volumes, and the company achieved revenue growth in the UK and Germany, plus Africa and a number of other emerging markets.
“Excise-driven market dynamics in Russia, and our transition to a new pricing strategy in the U.S. slowed our revenue and profit momentum in non-EU territories, masking the good growth we’re generating in Asia-Pacific and Africa and the Middle East,” Cooper said in a press release issued after the results.
Despite the weak economic environment, Cooper said consumers are not reducing their tobacco consumption.
She added that the EU market would remain tough for at least another 12-to-18 months.