IMPERIAL Tobacco yesterday said it is seeing a hefty decline in the EU cigarette market as austerity measures and illicit trade over the Spanish border hammer sales.
The company – whose brands include Lambert & Butler, Gitanes and Superkings – said industry-wide European volumes fell six per cent in the nine months to the end of June.
But investors pushed Imperial shares up after the firm said it would meet year-end targets and is planning to enter the fast-growing e-cigarette market during 2014.
“We continue to focus on maximising opportunities for our total tobacco portfolio in the EU against a backdrop of weak industry volumes,” said chief executive Alison Cooper.
Earlier this year Imperial backed the successful campaign against plans to introduce plain packaging for cigarettes in the UK. But it now faces another regulatory challenge in the form of forthcoming EU laws that are set to ban menthols, 10 packs and slim cigarettes within three years.
Jonathan Jackson, head of equities at Killik & Co, said the company remained a good investment proposition, pointing out that Imperial would be a potential acquisition target “if the industry moves from four players to three”.