(Adds detail and analyst comment.)
By Michael Carolan
Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- Imperial Tobacco Group PLC (IMT.LN) said Tuesday its full-year performance will meet expectations as it continues to shrug off the effect of the global recession.
The world's fourth-largest tobacco group by sales said in a trading update that its performance and financial position for the year to Sept. 30 remain in line with management's expectations.
Analysts expect the company to post pretax profit for the year to Sept. 30 of about GBP2.21 billion, up from GBP1.61 billion last year.
The maker of Davidoff, Gauloises Blondes, Gitanes Blondes and JPS cigarettes said in July it was benefiting from the growth in value cigarette and fine cut tobacco brands in mature markets, whilst driving mainstream and premium cigarette brands in emerging markets.
It said Tuesday that these trading trends have continued.
Its brief trading update contained no surprises, but was reassuring nonetheless. By 0701 GMT, the company's shares were up 11 pence, or 0.6%, at 1763 pence in a higher London market. The shares have dropped around 5% since the turn of the year as the market's favor turned away from defensive stocks toward more cyclical stocks on hopes of recovery.
Ambrian analyst Andrew Darke was reassured by the company's working capital inflow in the second half of the year, after an increase in spending in the first half.
The company said it will convert more than 100% of its profit from operating activities into cash in the full year. At the half year stage, only 53% was converted after a temporary increase in working capital as the company stepped up production ahead of tax increases in Poland and Slovakia.
Imperial added Tuesday that the integration of its Altadis acquisition is progressing well and is on track to deliver the expected synergies.
The company is targeting synergies of EUR180 million in the current year and EUR400 million by the end of 2012 from its integration of Altadis, the Franco-Spanish tobacco group it bought early last year for EUR12.6 billion.
-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; michael.carolan@dowjones.com