A cigarette price war in Spain will hit Imperial Tobacco's revenues this year, but the company's confidence about the outlook has given a lift to its shares.
In a trading update Imperial said its full year performance was in line with expectations, despite total revenues rising just 2%. The effect of the Spanish price war - which has now been halted - has been offset by strong performances in eastern Europe and Asia-Pacific.
Imperial said recent price rises in Spain - its third biggest market after Britain and Germany - would help make up for a delay in raising prices in the UK. Martin Deboo at Investec said:
According the Spanish tax authorities, [recent price rises] have restored Imperial's key brand Fortuna to its pre-price war price point of €3.85 per pack. (Market leader Marlboro has also moved back to its pre-price war level of €4.25 per pack).
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