IMPERIAL Tobacco surprised investors yesterday by announcing a return to volume growth in the last quarter of 2010 and pledged to pay half its profits in dividends.
Imperial, with cigarette brands including Lambert & Butler, West and Gauloises, said cigarette volumes rose 0.5 per cent in its October to December 2010 first-quarter.
Fine-cut loose tobacco and price rises boosted overall revenues to see a five per cent rise.
The recovery in trading was led by strong growth in eastern Europe and in its Africa and Middle East region while its mature markets such as in western Europe and the United States provided good revenue growth.
The shares soared 5.9 per cent to close at 1,900p after the upbeat update.
The Bristol-based company added it will return to paying out 50 per cent of its adjusted earnings as dividends for the current year to September 2011, back to the levels before its big Altadis acquisition in 2008.
Chief executive Alison Cooper said: “We made a good start to the year with underlying tobacco revenues up five per cent and increased cigarette and fine cut tobacco volumes.”
Last November, Cooper had predicted a return to cigarette volume growth this year after a fall of 4.2 per cent in the year to September 2010 due to tough markets in Spain, Russia, the United States and Ukraine.
The company had seen its volumes fall as smokers switched to cheaper, cigarettes in the global downturn but it had offset this by price rises, on-going cost savings and growth in its fine-cut loose tobacco.
Imperial became the number two cigarette maker in Europe after Philip Morris International following its takeover of Franco-Spanish Altadis. It is the market leader in the UK.