Imperial Tobacco appeals to investors as luxury goods drive revenue growth

As Imperial Tobacco updates the market with Q3 results Sheridan Admans, investment research manager at The Share Centre, explains what they mean for investors.

"This morning, Imperial Tobacco reported Q3 results which saw revenues rise 3% on the back of its pricing strategy. However, due to challenging conditions in some of its markets, volumes for the period fell.

"Imperial Tobacco continues to experience strong growth in its emerging markets and there has seen an increased demand for its luxury products. Cuban cigars are up 1% in total and 10% in emerging markets, with snus volumes growing by 39%.

"However, difficult markets persist and competition in the US and illicit trading in Ukraine remain a challenge for Imperial Tobacco.

"The company's overall financial and operational positions are in line with the Board's expectations. We continue to recommend Imperial Tobacco as a ‘buy' for its attractive dividend. We also anticipate that the company can grow the dividend at a conservative rate year-on-year, which it has demonstrated a consistently over the last 10 years."