Tag Archives: Imperial Tobacco
Imperial Tobacco, one of world’s largest tobacco companies, managed to increase its full year dividend by 10pc despite volumes falling 7pc. The newely released data shows that during the year company;s volumes dropped to 294 billion sticks in comparison with 317 billion last year. These days Imperial Tobacco faces declines in a number of markets across the world, because more and more smokers quit.
The tobacco company is going to reduce the level of stock held by distributors in a number of countries by 9 billion stick equivalents, including Iraq and Russia which have intencified the battle against tobacco use in theor countries.
Total annual income dropped 6pc to £26.6 billion but the company delivered a 25pc increase in pre-tax profit to £1.52 billion. Imperial tobacco has experienced the effects of currency volatility. Total adjusted operating profit dropped 5pc to almost £3.02 billion but was flat on a constant currency basis. Companie’s debt was lowered by £1 billion due to initiatives such as partial IPO of its European distribution business, Logista, which increased £395m.
The company;s final dividend is 89.3p a share and it plans to increase it till the end of the year. It wants to increase the dividend by 10pc annually.
Chief executive of Imperial Tobacco Alison Cooper, expresses his satisfaction of present data and says that in future the company intands to improve its presence on the tobacco market by buying new brands from Lorrilard and Reynolds American.
Earlier the information about how much tobacco companies earn in Ireland was hidden from public but today the value of the Irish market to Big Tobacco has been revealed for the first time.
A new study says that the Big Tobacco in Ireland in 2011 made €227 on sales and profits of €104m. Moreover, after excise duties they enjoyed profit margins of up to 55% which is 3 times more than achieved food and drink manufacturers.
The study was conducted by Dr Robert Branston of the University of Bath. He said that Ireland is one of the easiest markets in Europe for cigarette companies to get a profit. 79% of the cost of a cigarettes package goes to the state in form of taxes and the rest is profit for manufacturers.
The study showed that leading tobacco maker Japan Tobacco International, which produces Benson & Hedges and Silk Cut, sold €112m worth of tobacco to Irish consumers in 2011.
Imperial Tobacco, the maker of Davidoff and Richmond, made €80m. British American Tobacco which produces famous Lucky Strike cigarettes made about €35m. As to new competitors, these days it is hard for them to enter the Irish market due to severe control on tobacco ads.
Dr Branston said that while Ireland earned €1.42bn in taxes on tobacco during 2011, this amount dropped by €2bn cost of caring for smoking-related diseases.
Tobacco companies can continue to modify premium prices and make big profits because their products are very cheap to make and competition in such a highly regulated market is very limited. What makes tobacco companies to fight tobacco control measures is great profitability.
The study was commissioned by the Irish Heart Foundation and the Irish Cancer Society. They say that the Department of Health is allowing these big profit margins through ineffective tax policies. They require tobacco taxes to be increased.
The British authorities is still looking at banning branding on cigarette packages despite the fact that it disregarded recommendations from its legislative agenda presented in parliament on Wednesday, Prime Minister David Cameron said.
Britain had seemed to become the first European nation to make tobacco companies to remove brand names and to use standardized packaging, a move opposed by the cigarette makers, which sees it as affecting their earnings.
Queen Elizabeth made no reference to the strategies in a speech placing the government’s legislative plans for the year ahead, attracting criticism from opposition lawmakers and dissatisfaction from anti-smoking groups.
Nevertheless, Cameron told parliament that the authorities were still looking at the issue.
The Department of Health carried out four months of consultations in 2012 to collect evidence on whether plain tobacco packaging would help young smokers stop smoking and help existing smokers forget the habit.
In 2012, Australia enforced a law declaring tobacco products have to be sold in olive green packages with graphic health warning labels.
Cuba, whose high class cigars are world famous and feature exclusive packages, released a challenge against the Australian law at the World Trade Organisation last week.
Despite its lack from the government’s plans, the chief of the opposition Labour Party suggested to help speed through any proposed regulation.
Miliband also asked the role of government adviser Lynton Crosby in the decision, indicating his consultancy firm had worked with cigarette makers.
A spokesman for David Cameron said Crosby cannot influence over the contents of the Queen’s speech.
Campaign groups wrote to Health Minister Jeremy Hunt indicating dissatisfaction over the lack of the plan from the government’s programme.
“The failure to bring forward regulation fatally undermines the Government’s credibility on public health concerns,” said the letter from the Smokefree Action Coalition, an alliance of over 100 health organisations.
Cigarette makers such as Philip Morris and British American Tobacco are worried about that standardized packaging would eat into sales of higher margin brands and say it would lead to the global black market in tobacco.
Imperial Tobacco shares have grown slightly since reports published in the British media that Cameron had dropped the initiative.
Starting April, Imperial Tobacco, the maker of Davidoff cigarettes, is introducing JPS Tobacco that has been particularly produced for adult smoking people to make their own cigarettes by means of a ‘cigarette making’ kit.
Sue Tranter, Consumer Marketing Manager at Imperial Tobacco says that the company is constantly exploring the choices of adult smokers in the UK, and other related markets, to ensure their category-leading portfolio precisely mirrors the category dynamics.
“In the present economic conditions, the popular down-trading tendency has grown as more adult smoking people are moving down through the cigarette price sectors and a considerable number now choose cheaper alternative tobacco alternatives.
“Information gathered from this process have shown to the company that the UK is ready for JPS Tobacco which, after buying the tobacco company, enables smokers to make 20 quality King Size cigarettes for £3.87. 12 million UK adults presently prefer to smoke tobacco and the present economic climate have pushed many smokers to look at illegal methods.
“This brand introduction will confirm that cost-sensible smokers, who buy tobacco from illegal tobacco dealers, will take into account purchasing from legitimate dealers again as the JPS brand provides them with a quality reassurance supported by the heritage and value for which JPS is well known.”
The JPS cigarette making kit can be bought at a suggested retail price of £6.99 and includes a 14g pack of JPS Tobacco, 100 King Size cigarette filter tubes and a cigarette maker. Each component of the kit can also be purchased separately. If sold separately, the RRPs are: JPS Tobacco £3.67; Make Your Own Tubes 99p for 100 and Make Your Own cigarette maker £3.09.
Sue says; “Imperial Tobacco has received important observations both locally and internationally from markets with trends the same as the UK. The new JPS Tobacco of Imperial offers consumers the quality and heritage of JPS at a good price proposition. This launch will also support retailers by encouraging smokers to turn their backs on illegal traders and buy tobacco in legitimate outlets.”
During the last several years Imperial Tobacco has made great efforts in changing its tactical target to put customers at the center of its business and push organic sales growth. It’s been a quick change and the company was happy with the growth it is making, creating quality growth from high quality brands to push sustainable earnings.
Imperial Tobacco‘s success is constructed around a differentiated strategy that’s aimed at using its understanding of consumer reasons to appreciate the potential of its portfolio and provide consumers with the best tobacco experiences.
The company’s target at pushing sales has provided numerous highlights in 2012. Imperial has raised tobacco net profits by 4% to .7.0 billion, as it continued to develop momentum behind its total tobacco portfolio.
Its total volumes restored strongly from its first quarter and the cigarette maker finished the year with general stick equivalent volumes decreasing 2.7%, a lot of which was caused by current market weakness in Ukraine and Poland and compliance with international trade sanctions in Syria.
The quality of Imperial’s brands and the growth it is delivering is shown in the strong portfolio benefits the company made in 2012. The excellent performance of its key strategic brands, Davidoff, Gauloises Blondes, West and JPS, led to combined volume growth of 7% and net income growth of 13 %. Its fine cut tobacco volumes were firm, with net profits increased by 13%. The tobacco company presented further strong benefits from premium cigars growing volumes by 11% and profits by 10% and increased Scandinavian snus volumes by 53% and net profits by 46%.
Key Strategic Brand Success
Driving momentum behind Imperial Tobacco’s major strategic brands is a current goal. In 2010, Davidoff, Gauloises Blondes and West generated 26% of the company’s overall stick equivalent volumes; currently they represent 30%. Increasing the sales momentum behind Davidoff has been a special target in 2012. The company provided volume growth of 9% and made great progress in Asia, the Middle East and Eastern Europe, getting volume and share in profitable consumer growth segments such as kingsize superslims and queen size.
The Ukrainian legal cigarette market in 2013 could decrease to 75 billion cigarettes, in comparison to 80 billion items in 2012, states the director for corporate issues at Imperial Tobacco Ukraine, Yuriy Kyshko.
Yuriy Kyshko mentioned that growth in 2012 in the smuggling of cigarettes was observed on the Ukrainian market.
Imperial Tobacco Ukraine CFO Volodymyr Antypenko explained that according to an order of the company, TNS Ukraine experts carried out a research, under which counterfeit product consumption in Ukraine increased from 4.2% in October 2011 to 4.4% in October 2012.
Antypenko added that in 2012 some tobacco companies were participated in price wars on the Ukrainian cigarette market, which were described by the drop in the prices of some products by 15-20% in some locations.
He mentioned that starting with New Year only Imperial Tobacco Ukraine and Philip Morris Ukraine announced new prices of their tobacco products. He considers that the rest of tobacco companies did not raise prices due to the large amount of product stocks or expecting that the law on the hike of excise taxes will be not approved by the Ukrainian president.
Commenting on the impact of the smoking ban at restaurants and bars, which came into force on December 16, 2012 in Ukraine, Antypenko said that it’s difficult to identify how highly the requirement affected cigarette sales.
On November 20, 2012 the Ukrainian parliament passed law, raising excise duties for alcohol and tobacco.
The document supposes a rise in specific excise rates on non-filter cigarettes to Hr 72.70 per 1,000 cigarettes, and on filtered from Hr 110.64 per 1,000 to Hr 162.60 per 1,000 cigarettes.
Starting January 1, 2014, the specific excise rate on non-filter cigarettes will be established at Hr 77.50 per 1,000 items, from January 1, 2015, at Hr 82.50 per 1,000 cigarettes, and excise rate on filtered cigarettes will be Hr 173.2 and Hr 184.50 per 1,000 items.
Cigarette firms have been taken down once again over their absence of compliance with new plain packaging regulations just day before the law becomes operational.
Health Minister Tanya Plibersek is requiring two industry giants – Imperial Tobacco and British American Tobacco – take away ringed watermarking from their cigarette paper that seem to make their appearance more stylish.
The new regulations demand plain paper.
And she has also told BAT not to place obvious travel destination sources in the batch coding on their cigarettes.
The coding on its cigarettes read LDN, NYC, AUS or OZ in a way the minister says was intended to make people who smoke think of the “glamour of travel”.
“There is a precise set of regulations about what is permitted and if we start permitting variations then the cigarette firms will push the boundaries,” she told.
Its just one of a series of strategies cigarette firms have been using to subvert the new regulations that from December 1st require all cigarettes be sold in olive packaging with graphic warning labels covering 75% of the front of the pack.
Ms Plibersek attacked cigarette firms in September for perpetrating a “sick Joke” when they started providing new plain packs that stated “It’s what’s on the inside that counts.”
At the same time, Action on Smoking and Health says that cigarette maker Imperial Tobacco has been providing roll-your-own smokers with free tins placed with the old branded packaging name “Champion”.
And two weeks before plain packaging appeared, a new brand of cigarette has been released called “Ice” – the term of an illegal drug, as outlined by ASH chief executive Anne Jones.
Imperial Tobacco refused that JPS Ice was a drug reference. A spokesperson stated that it is a mint flavoured cigarette and the name `Ice’ is a typical descriptor used by the tobacco industry to differentiate equally flavoured cigarettes.”
The minister has as well charged Philip Morris of “deliberately trying to create chaos” around the launch of plain packaging by declining to change branded packs held by small businesses for plain packaged packs.
Domenico Greco from the Combined and Mixed Business Association said that the firm was not changing packs if small businesses bought fewer than 4000 cigarettes per week.
The company did not discuss the association’s accusation head-on, but spokeman Chris Argent said that Philip Morris has been cooperating with the federal government and retailers to guarantee an easy transition to plain packaging.
The minister said that her major goal is the cigarette firms and that small-business owners who break the new cigarette plain packaging regulations that come into effect from December 1 are more probably to be “educated” than fined up to $1 million for selling tobacco products with branding.
The worldwide tobacco market is appreciated at around £450 billion and the industry creates about 5.5 trillion cigarettes per year. While cigarette sales in developed countries keep on to drop a little bit year on year, total global market drops are demonstrating signs of moderating. Current developments reveal that individual smokers will consume fewer cigarettes each and smaller percentages of populations will smoke. Nevertheless, continual volume growth is widely expected in emerging markets, motivated by population growth and raising disposable earnings.
The largest single tobacco market is China, where the industry is the property of the state, with some 350 million smoking people who make up for more than 40% of the worldwide total consumed.
The four largest global cigarette firms, including British American Tobacco, Imperial Tobacco, Japan Tobacco and Philip Morris International, make up about 45% of the worldwide market, or about three-quarters of the market outside China.
Cigarette firms deal with a significantly competing marketplace but the total value of the worldwide market keeps growing. This value is predicted to exceed £500 billion by 2015, despite stronger rules, worldwide economic uncertainty and high unemployment rates in developed markets. Consumers worldwide are increasingly looking for real value, which means that quality and advancement will both play an increasing} role in providing market share.
Cigarettes are among the most frequently marketed products on the black market because of high profit margins, the relative ease of production and movement, together with low recognition rates and fines. It is a common problem that is made worse by regulatory policies in some countries.
Data suggest that more than 660 billion counterfeit cigarettes are smoked yearly. This has a adverse effect on consumers, retail dealers, governments and cigarette firms. For smokers, illegal cigarettes mean no quality controls and no health warnings, while smuggled real products may have health warning labels that do not satisfy local government rules.
As counterfeit cigarette sales are efficiently not regulated, criminals also have no qualms with supplying anyone with their products, including minor smokers.
It is calculated that governments around the world are losing up to US$40 billion a year in excise and other duties. Tackling this unlawful trade effectively demands cooperation between the industry, regulators and enforcement specialists, supported by the establishment of acceptable duty policies, strong control and powerful enforcement.
The increase in cigarette prices was the reason for growth of the Imperial Tobacco’s full-year income. Price rises helped compensate dropped volumes because the fourth-largest cigarette company in the world was hit by recession in Spain and svere markets in Poland and Ukraine.
The British multinational tobacco company produces and markets more than 340 billion cigarettes each year. Imperial Tobacco is the owner of such famous brands as Davidoff, Gauloises and West. The tobacco company said on September 20 that its income would increase around 4% for its year to end-September when stripping out uncertainty of exchange rates.
Overall sale volumes dropped by nearly 3%.
Imperial Tobacco intends to oppose Europe’s crisis by suggesting economy-brand cigarettes, such as JPS and Lambert & Butler and roll-your-own products, and at the time the company will raise prices for richer consumers in Western Europe and the United States.
The cigarette group declared that whilst growth was especially steadfast in Eastern Europe, Africa and the Middle East and in its Asia Pacific region, volumes decreased by weakness in Poland, Spain and Ukraine, as well as by sanctions in Syria.
The tobacco company has experienced the decrease in sale volumes in Ukraine because of raised illicit trade in cigarettes on which no tax has been paid, while its business in Poland for hand-rolling tobacco was damaged because farmers sold more tobacco directly to consumers.
Spain it is the company’s third-largest market after Britain and Germany. There volumes have been falling because of recession and high unemployment, while United Nations sanctions since the middle of 2011 have stopped its trade to Syria.
Imperial Tobacco, which is as well the world’s largest producer of cigars, fine-cut tobacco and tobacco papers, said that its key strategic brands such as Davidoff and Gauloises were expected to see strong volume and income gains because they still showed a rising proportion of the company’s overall cigarette volumes.
Imperial Tobacco said that its operating performance and financial situation were along with its expectations as it gave a trading update towards the end of its financial year to September 30 and ahead of annual results set for Oct. 30.
Health department director for health promotion Vimla Moodley said that they will be follow Australia in plain packaging plan. That means that there will be no branding on tobacco products sold in South Africa.
After the discussion of members of Parliament’s health portfolio committee about proposed new smoking rules, she said that the department was as well testing the use of “images” on cigarette packaging.
These images consist in representation of the “health effects” of smoking.
“Till now, the rules allowed text messages demonstrating health warning labels, for example ‘tobacco is harmful to your health’.
But on the basis of international guidelines they need to implement warning labels, which are images of health effects of smoking tobacco products, she added.
Now the health department is analyzing pictures together with the health messages in Gauteng and the Western Cape.
The full report would be presented by December this year.
Moodley noted that Australia has already introduced regulations urging cigarette makers to use plain, non-branded packaging.
Moodley said that if there is support for introduction of the plain packaging rule, they will follow Australia.
Cigarette makers, especially British American Tobacco, Philip Morris and Imperial Tobacco, strongly opposed Australia’s plain-packaging laws. However, the companies got a set-back on August when the country’s highest court approved the new rules, which are established to become operational on December 1 this year.
Moodley added that the new South African rules, which are still under review, could be implemented by as early as next year.
The suggested rules as well will mean the ban on smoking in public places and “certain outdoor places”.
Moodley told the committee that present rules permit 25% of the floor space in a restaurant or an indoor facility to be used as a smoking area.
These new rules will mean that indoor public places should be 100% smoke free. Those spaces will no longer have an area for indoor public tobacco use.
Other places that are considered by the department to be 100% smoke free included “entrances to public spaces, outdoor eating and drinking areas, health facilities, schools, child-care facilities, covered walkways and in stadiums”, she said.
In accordance with the latest data, so-called “smoking prevalence” in South Africa is decreasing, though nearly 44,400 deaths in the country each year are “related directly to smoking”.