Imperial cigarette sales dragged down by Middle East conflict

The company said that withdrawing completely from Syria, and further disruption to supplies in Iraq, accounted for nearly half the 9.1% fall in volumes in the quarter.

Up in smoke: the French brands were big sellers in Syria (Rex)

The conflicts in Syria and Iraq continued to take a big chunk out of cigarette sales at Imperial Brands in the final three months of 2015.

The company (which changed its name from Imperial Tobacco earlier this month) said that withdrawing completely from Syria, where its Gauloises and Gitanes cigarettes have been big sellers, and further disruption to supplies in Iraq, accounted for nearly half the 9.1 per cent fall in volumes in the quarter.

But the ability to push price rises through for cigarettes in the UK, Germany and Australia – and the benefits of last year’s $7bn (£4.9bn) US takeover of ITG Brands (Kool, Winston and Salem) – helped boost tobacco revenues by 16.6 per cent to £1.63bn.

A spokesman said that while Syria and Iraq had traditionally been important markets for Imperial, particularly its French brands, they were less important in terms of profitability. He added that the impact of the two countries on sales would begin to unwind in the next few months and be less marked in the second half of the year.

In the US the group has upped marketing for both the Winston and Kool cigarette brands, which it said had made them more visible in shops.

Imperial also reported growth in both its cheaper and premium cigars.

Its chief executive Alison Cooper said: “We are further sharpening our focus on quality revenue growth and have advanced the simplification of our portfolio... In the US, the ITG Brands team has made excellent progress in the quarter, successfully executing our retailer and wholesale programmes and establishing the foundations for a year of strong delivery.”

The group is still expecting to make £55m of cost savings during 2016 – part of its plans to cut costs by a total of £300m by the end of 2018. It recently closed a factory in Logrono, Spain – a move that it blamed, in part, on the increasing number of smuggled cigarettes making it into the country.

Imperial said that it was “well placed to meet expectations for the full year” – a period in which it will also benefit from the impact of no longer distributing Philip Morris brands in the UK and Morocco; the 10-year deal ended last September.