Austerity-hit European smokers cut into Imperial Tobacco’s first-half profits as they switch to roll-your-owns and illegal cigarettes.
The change was most stark in Spain, one of Imperial’s major markets, where sales of cigarettes fell by 12% but sales of cut tobacco soared by 60%.
Imperial’s Ducados Rubio saw particularly strong growth in the make-your-own market where smokers purchase ready-made tubes with filters and fill them with cut tobacco.
In the UK the trend was similar but less strong, with cigarettes sales down 7% but cut tobacco up 1%.
Operating profits for the six months to March fell by 6.5% to £1.4 billion on sales down 4% at £13.4 billion. The dividend goes up 11% to 35.2p a share.
Chief executive Alison Cooper said that while the first half had been tough, cost-cutting and innovations in brands should drive a resumption of growth in the second half and into 2014.
She pointed out that Imperial’s brands Davidoff, Gauloises, West and JPS had produced 5% growth in sales on a 1% rise in volumes as price rises were put through successfully.
Cooper also said that the company is working with the developer Fontem Ventures to investigate alternative ways of delivering nicotine “which are not just e-cigarettes”.
