Imperial Tobacco, the world’s fourth giant cigarette producer, has raised its entire year dividend by 10% even with volumes decreasing by 7%.
Cigarette volumes in the year to September 30 have fallen to 294 billion stick equivalents in comparison to £317bn previously, as cigarette-producers still deal with decreases in several markets, which include the UK, as smokers stop smoking.
Imperial also made a decision to reduce the level of stock kept by distributors in a number of countries by a total of over 9bn stick equivalents, including in Russia and Iraq, where it has been struggling against political and regulatory chaos.
Entire profit in the year declined 6% however, Imperial, which has been restructuring, provided a 25% boost in pre-tax revenue. Like many other FTSE 100 firms, Imperial has sensed the results of currency volatility. Entire adjusted operating income, which strips out single exceptional items, dropped by 5% yet was stagnant on a continuous currency basis.
The group has an obligation to proceed raising the dividend by a minimum of 10% per year and on Tuesday re-confirmed its confidence in that policy.
Shareholders were pleased with the results and Imperial was topping the leaderboard for the FTSE 100’s greatest risers on Tuesday morning, as shares increased over 3%.
Alison Cooper, chief executive of Imperial Tobacco, mentioned the results confirmed “a year of substantial delivery” by the company.
“We have strengthened our cigarette brands and market footprint, enhanced cash conversion to 91%, decreased debt and provided the extra 10% dividend boost to shareholders,” she added.
“We have accomplished our stock optimization system and realized over £60m of additional savings via our cost optimization plan. We’ve accomplished what we decided to attain, setting up a tougher business in the process.”
Ms. Cooper stated “Trading scenarios stay challenging in several areas but the actions we have undertaken to improve the quality and sustainability of the business have set us in a tougher position to generate growth and set up sustainable value for our shareholders.”
Imperial decreased costs by £60m within the year and stated it is on course to deliver cost savings of £300m per year by 2018. In April, it declared it would be closing its last UK plant, in Nottingham, where it employed 540 people.