Imperial benefits from German deal

Cigarettes giant Imperial Tobacco today delivered record half-year operating profits of £497m (€707m) after integrating German acquisition Reemtsma.

The figure, which represented a leap of 56% on a year earlier, comes 12 months after Imperial completed the £3bn (€4.36bn) deal to add the West and Davidoff brands to its own portfolio which includes Lambert & Butler and Embassy.

Imperial said it had made “significant progress” integrating Reemtsma and added it was on course for annual cost savings of £170m (€241.7m) in 2004.

Chief executive Gareth Davis said the results showed the Bristol-based firm was now a much stronger company, with an improved international reach.

He added: “It is now nearly a year since we completed the Reemtsma deal and the rationale for the acquisition is being clearly demonstrated.”

Today’s figures, which came in ahead of analysts’ expectations, also showed a rise in bottom-line pre-tax profits to £290m (€412.3m) for the six months to March 31 – compared with £261m (€371m) a year earlier.

In the UK, operating profits were down to £177m (€251.6m) from £188m (€267.2m) last time as Imperial faced up to a decline in the size of the market.

It said this was due to the recent change in the amount of cigarettes that travellers are allowed to bring back into the UK.

In Germany, Imperial’s market share stabilised at 20% with continued growth from Davidoff and an uplift from West offsetting a decline in its more traditional brands.