Imperial Tobacco reaffirms full-year target

Imperial Tobacco is up 3% after reiterating its full-year expectations despite the fact that volumes have been down.

The tobacco company is the second largest in Europe, but the eurozone debt crisis is taking its toll on revenue. Rising unemployment and austerity in the region means lower disposable incomes, which equates to lower sales. The firm stated that European tobacco sales were down 6% for the nine-month period until June, compared with the same period last year. Despite the decline in sales, Imperial Tobacco stated that its key brands are outperforming the overall market, and it still expects full-year results to hit target.

For the year to date the share price is down 11%, whereas rival British American Tobacco is largely unchanged over the past year. Since this makes Imperial Tobacco relatively cheaper, traders bought into the stock this morning.

Tobacco shares are considered to be defensive stocks, which means they tend to perform well regardless of what the overall market is doing. Global equity markets sold off towards the end of May, as traders were worried the Federal Reserve would taper its stimulus package, but tobacco stocks held up well when compared with other sectors.

Imperial Tobacco Group plc chart

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