Imperial Tobacco Forecasts Drop in Cigarette Shipments

Europe’s second-biggest tobacco company, expects first-half cigarette volume to fall because buying patterns in the U.K. shifted spending to the second half of the year.

Selling quantities for the period ending March 31 will drop about 1 percent, the Bristol, England-based company said today in a statement. Revenue will increase about 2 percent at constant currency-exchange rates and excluding other income growth in its Moroccan business, Imperial said.

The shift in U.K. spending will have no overall impact on the full year, the company said today. Imperial Tobacco confirmed that its financial performance remains in line with the board’s previous expectations.

“It’s not particularly bad but it’s not particularly good either,” said Rob Mann, an analyst at Collins Stewart in London, in a phone interview. He recommends buying the shares. “Profits, I would imagine, will be as usual in line with where they’re expected to be.”

The cigarette-maker fell as much as 61 pence, or 3.2 percent, to 1,861 pence and traded at 1,869 pence as of 9:54 a.m. in London. The stock has dropped 8.2 percent in the past year, compared with a 4.8 percent gain in shares of rival British American Tobacco Plc.

Tobacco companies are relying on growth in emerging markets to offset declining consumption in western Europe and North America. Spain remains a “challenging” market because of a duty increase in December, the ban on smoking in public places and a weak economy, Imperial said.

First-half shipments of Davidoff, Gauloises Blondes and West cigarettes increased, boosted by emerging markets, Imperial said. The JPS brand has maintained its “excellent” performance and Imperial has continued to deliver strong growth in fine-cut tobacco volume, it said.

Imperial will release first-half results on May 10.