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Imperial Tobacco attacks 'knee jerk politics' over plain cigarette packaging
Europe’s second biggest tobacco company would consider legal action against the government as regulation hits half year results
Imperial Tobacco has criticised the “lack of process” over government plain cigarette packaging proposals and said the company would work to protect its intellectual property.
Alison Cooper, chief executive of the FTSE 100 group, said Government plans to ban branding on cigarette packets by spring next year could hurt retailers and increase illicit trade.
“I’m concerned about the current process or lack of process there seems to be and political knee-jerking around plain packs in the UK,” she said.
“It’s our intellectual property and it’s brand equity we’ve invested in over a period of time and clearly we look to protect it.
“[Legal action] is not a priority on our agenda but clearly, at the end of the day as a last resort, it has to be considered.”
Ms Cooper made the comments as Imperial Tobacco posted a 22pc drop in half-year pre-tax profits to £648m after the company cut costs and reduced the amount of stock held in warehouses against a market of increasing regulation.
Revenue fell 5pc to £12.7bn for the half-year to Match 31 but Imperial Tobacco stood by its full-year guidance for “modest” growth.
“It’s a continuing tough regulatory and tough macroeconomic environment in many of our markets but that’s business as usual for us and we just have to operate in those markets to win”, said Ms Cooper.
Russia recently banned tobacco advertising and smoking in public places and Ms Cooper said the regulation is having “quite a significant effect on the market”.
“We’re estimating market volumes in Russia will be down about 10pc for the full year”, she said.
Imperial Tobacco confirmed its commitment to deliver £300m of cost cuts by 2018 and increased its interim dividend 10pc to 38.8p.
Ms Cooper said the fall in revenue reflected the “one-off” impact of reducing the number of cigarettes held in Imperial Tobacco’s warehouses.
“We’re looking to reduce the amount of time between product leaving our factory and getting to the hands of the consumers.
“That had the impact of over 6bn sticks in the first half but that’s a one-off impact as we take some supply out of the market”, she said.
In February, Imperial Tobacco launched its first e-cigarette Puritane, which is stocked in Boots, and are planning increased publicity to “drive further awareness of the product”. “It’s building quite nicely, so I’m happy with it so far”, said Ms Cooper.
Imperial Tobacco shares were up 0.75pc to £25.36 in afternoon trading.