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Imperial Tobacco Says Iraq, Syria Conflicts to Weigh on Volume

By Steve Wynne-Jones
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Imperial Tobacco Group said it expects conflict in Iraq and Syria to weigh on its first-quarter shipments after full-year earnings rose 2.4 per cent, beating analysts’ estimates.

Adjusted operating profit gained to £3.05 billion ($4.7 billion) in the 12 months through September, the company said in a statement Tuesday. The average of 13 analyst estimates compiled by Bloomberg was £2.96 billion.

“First-quarter volumes will continue to reflect the situation in Iraq and Syria as well as a strong comparator quarter for volumes last year while first-half revenue should benefit from stronger relative pricing,” Chief Executive Officer Alison Cooper said in the statement. “Overall, we are well placed to meet expectations for the coming year.”

With conflict in the Middle East and next year’s planned introduction of plain packaging in the U.K., Imperial’s business is being threatened by factors largely outside of its control. Investors are pinning their hopes for growth on the company’s ability to revive the fortunes of the U.S. cigarette brands it acquired from Reynolds American, as part of a £4.6 billion deal completed in June.

Imperial Tobacco said 19 August sales growth was being eroded by a deterioration in the Iraqi economy, which is suffering from the slump in oil prices and as the country’s army tries to recapture territory from Islamic State.


Bloomberg News, edited by ESM


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