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Tobacco firm gets sales boost from emerging markets

Lambert -amp; Butler and Golden Virginia group Imperial Tobacco cheered investors with a return to sales growth in the last three months of 2010.

The world's fourth biggest cigarette maker reported sales gains for both fine cut tobacco and cigarettes in the first quarter of its financial year to December 31, with volumes up 6.3% and 0.5% respectively. The Bristol-based group has benefited from demand for value brands and sales of its products in emerging markets.

Stick equivalent sales volumes - covering both cigarettes and cut tobacco - rose 1.2% in a turnaround on the 2.9% drop seen in its last financial year.

Shares rose 5% on the update, helping claw back some of the recent share price falls seen by Imperial since the start of the year.

It said its UK arm held sales volumes largely stable at £56.3bn in the 12 months to December 2010 against £56.6bn in 2009. Imperial's share of the UK cigarette market edged up by 0.1% to 45.3%, but its share of fine cut tobacco market fell from 57% to 53.5%.

The group has raised prices twice in the UK since September, with the latest hike sparked by the Government's move to increase VAT to 20%.

The price increases have added an average of between 29p and 35p per pack.

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Imperial has seen cash-strapped UK consumers turn to cheaper economy brands and cut tobacco in the past few years.

The group said there was strong demand for JPS Silver and Windsor Blue cigarettes, as well as fine cut brands Gold Leaf and Golden Virginia.