Imperial warns on profits in Spain

Imperial Tobacco yesterday warned that profits from its Spanish business would fall by 40 per cent this year due to a price war in the country. Imperial, best known for the Gauloises, Lambert & Butler and Davidoff cigarette brands, cautioned that the impact on profits could be as much as £110m, which will include a £40m one-off charge from restructuring.

Sales across Spain have been hit by a tightened smoking ban that came into effect at the start of 2011 and made it illegal to smoke in bars, restaurants, on television, in hospitals and near schools. Imperial built up its presence in Spain in 2007 through the £11bn acquisition of Altadis, the world's leading cigar-maker, Gauloises owner and Europe's third-largest cigarette manufacturer with 60 per cent of its sales in France and Spain.

Spain contributed profits of £268m from a group-wide total of £3.1bn in the year to last September.