Imperial Tobacco has slashed profit expectations for its Spanish business after competition in the country forced it to cut prices for cigarettes. Imperial, whose brands include Lambert & Butler and Gauloises Blondes cigarettes, said operating profits in Spain could fall short of previous expectations by up to £110m.
Spain accounted for more than 8% of Imperial’s revenues in the year to 30 September, with adjusted operating profits coming in at £268m, but the tobacco market has been under pressure there due to tough economic conditions. The company said tough conditions in Spain resulted in a decline in the cigarette market and growth in rolling tobacco.
Imperial implemented price increases at the start of the year, but competition from rival Philip Morris, the maker of Marlboro cigarettes, forced it to cut prices.
“We have acted to protect our market position and the long-term sustainability of our Spanish business and continue to monitor the situation closely,” Imperial said.