Shares in cigarette and cigar group, Imperial Tobacco (LSE:IMT) rose slightly in early trading after the company reiterated that it would meet management’s expectations for the year to 30 September 2009. In the trading statement, the company said it was making ‘good progress’ in integrating its operations Europe, which is expected to generate cost savings of €400 million by the end of 2012.
Overall, Imperial Tobacco noted that trading at its operations outside of the European Union (EU) and North America were performing better than expected, but were offset by weaker trading in the EU, and in particular in Poland and the Netherlands.
Performance in the United States is expected to be neutral:
“With our strong presence in the discount cigarette sector combined with the relative positioning of our cigar portfolio, we currently estimate the overall effect on our USA results for the 2009 financial year to be broadly neutral.”
Analysts were generally positive on the update. FinnCap reiterated its ‘buy’ recommendation, noting that the 5% dividend yield and FY 2009 P/E of 10 made the shares look attractive following the recent pull back in defensive stocks.