Sluggish sales hurt Imperial

SHARES in cigarette firm Imperial Tobacco fell yesterday after the cigarette giant warned its revenue growth will slow.

The company now expects first-half revenues to grow by two per cent a year, compared to five per cent in the last three months of 2010.

The maker of Lambert & Butler, West and Gauloises cigarettes attributed the sluggish growth to a tough market in Spain and a shift in trade buying patterns in Britain.

Martin Deboo, an analyst at Investec, said: “It is hard to characterise this as anything other than a difficult statement from Imperial...The news from the two key markets of the UK and Spain is a material negative in our view.”

Imperial could be further hurt by chancellor George Osborne’s decision to hike tobacco duty by inflation plus two per cent, increasing the price of a 20-pack of cigarettes to as much as £7.

A spokesman for the firm voiced fears that the government’s decision to ban displays of cigarettes in shops could also hit sales.

He said: “As a result of the government’s plan, there is a real concern over counterfeiting. We’ll continue stepping up our efforts to get out the word about disproportional regulation towards the tobacco companies.”

Imperial, which makes over 300bn cigarettes a year, said its global cigarette volumes had declined one per cent in the past half year.

The firm’s shares lost 12p in London trading yesterday to close at 1,910p.