Issue link: https://read.dmtmag.com/i/566084
20 tobaccoasia / Issue 4, 2015 (September/October) These migrations are of course not executed on a whim, but are in fact carefully planned and implemented gradually – usually over a period of three to six months. A key measure of success is the number of consumers in the respective mar- ket or markets who can be persuaded to complete the journey from one brand to another. "In the migrations we have completed over the last year, we've achieved a high success rate in transitioning consumers," Watkins asserted. Specialist Brands The second pillar of Imperial's optimized glob- al brand portfolio is composed of its special- ist brands. These are brands that are enjoyed by specific consumer groups and represent a rather dynamic range of cigarettes, but also fine cut to- bacco, rolling papers, cigars, and smokeless to- bacco products. According to Watkins, all of them have a track record of generating strong returns and they are: Imperial's premium cigars - led by Cohiba, Monte- cristo, and Romeo y Julieta - made gains in a number of markets, and Skruf, a snus brand, according to Watkins also had another excellent year, further enhancing Imperial's share position in Scandinavia. Growth and Performance "Our growth and specialist brands now account for 59% of all our tobacco net revenues, an increase of 7% in the last year," Watkins summarized. In terms of performance in the growth brands segment over the past year, JPS experienced growth in Australia and the EU, Davidoff enjoyed gains in Germany and Taiwan, and good progress was also reported from West in Turkey, Ukraine, and Japan. Some innovation initiatives and a newly launched international marketing campaign sup- ported the development of Gauloises Blondes across the markets. USA Gold maintained its momentum in several key countries and the company also ex- panded the brand presence of P&S, which is now available in 27 markets worldwide. Bastos reported- ly performed well in Vietnam while Imperial also recorded positive growth of its cigarette brands Fine and News in Africa and France, respectively. Additionally, the company has strengthened the UK share of L&B with a new value variant. As far as specialist brands are concerned, Wat- kins said: "Our specialist brands contribute posi- tively to our performance with underlying net rev- enue growth of 2% driven by strong performances from the snus and premium cigars amongst them". said Watkins. Sales of Golden Virginia, Drum, Route 66, and Rizla continued to underpin Imperial's leading global positions in the product segments of fine cut tobacco and rolling papers. Commenting on the financial results of the first half of FY2015 (ended March 31, 2015), chief executive Alison Cooper said: "This has been a good start to the year. The progress we're mak- ing with our strategic agenda is improving the consistency and quality of our performance, with our growth brands delivering 12% underlying vol- ume growth and further gains from our special- ist brands. We continued to build momentum in our growth markets and generated positive results from [our] returns markets. Cash conversion was up, our debt reduced significantly, and we deliv- ered another dividend increase of 10%. We are building on these successes in the second half and look forward to completing the US deal and real- izing the benefits of our enhanced brand equity and scale in this important market." The US Deal On July 15, 2014, Imperial Tobacco announced that a subsidiary - ITG Brands - would enter into a purchase agreement with Reynolds American Inc. for the acquisition of a number of that company's Overview-Adjusted Basis Half Year Result Change Constant 2015 2014 Actual Currency 1 Underlying 2 Growth Brand volume bn SE 70.5 60.2 +17% +12% Tobacco net revenue £m 2,945 3,054 R -4% +3% 0% Tobacco adjusted operating profit £m 1,295 1,275 R +2% +5% Logistics adjusted operating profit £m 73 73 0% +10% Total adjusted operating profit £m 1,367 1,346 R +2% +5% Adjusted earnings per share pence 93.3 89.6 +4% +7% Interim dividend per share pence 42.8 38.8 +10% Adjusted net debt £m (9,056) (11,027) R +18% HALF YEAR RESULTS FOR THE 6 MONTHS ENDED 31 MARCH 2015 Alison Cooper, current c.e.o. Gitanes, Golden Virginia, Route 66, Cohiba, Monte- cristo, Romeo y Julieta, Style, Rizla, Drum, Backwoods, and Skruf. "Our specialist brands contribute positively to our performance with underlying net revenue growth of 2% driven by strong performances from the snus and premium cigars amongst them," said Watkins. But contributions from Golden Virginia, Drum, Route 66, and Rizla also continue to underpin Imperial's leading global positions in the product segments of fine cut tobacco and rolling papers. However, some challenging market conditions and the company's stock optimization initiatives in Eastern Europe and the Middle East affected the performance of Style and Gitanes there. Meanwhile,