Profits soar at Imperial Tobacco

Imperial dominates the UK market and is planning more acquisitions

Imperial Tobacco, the world's fourth biggest cigarette company, has reported a 40% rise in annual profits.

The UK firm, which produces Embassy and Lambert & Butler cigarettes in Britain and West and Davidoff in Germany, saw its pre-tax profits hit £898m ($1.5bn).

Imperial said it had raised the estimated annual cost savings from its £3.6bn takeover of Germany's Reemtsma, in 2002, to £210m this year from £170m.

The company said it had cut 1,500 jobs as part of the integration process.

Chief executive Gareth Davis said around half of the jobs losses had taken place in Germany.

Bigger player

Cost savings from the Reemtsma deal totalled £150m last year, outstripping an original estimate of £140m.

Mr Davis said Imperial's stronger international presence - particularly in Europe following its acquisition of Reemtsma - had positioned it well for future growth.

He said Imperial planned to resume its acquisitions strategy, and was targeting a state-owned tobacco company in Taiwan.

In the UK, the company continued to dominate the market, raising its share to a 20-year high of to 44.4% in October, up from 44% in September.

The positive outlook lifted Imperial's shares by 1.5p to £10.28 in early trade on Monday.

Imperial shares have recovered from a low of 879p in February, but have still underperformed the FTSE-100 index by about 14%.