UK cinema chain Cineworld on Thursday posted an impressive set of first half results driven by a raft of 3D films including the musical Les Miserables, The Telegraph's Questor column said. With a strong film schedule in the second half of the year including the latest Hobbit film and Despicable Me 2, the group is confident it will meet full-year expectations. The increase is down to a number of factors including a higher proportion of ticket sales due to 3D films and the acquisition of independent art house group Picturehouse which achieved steady growth. The Competition Commission continues to investigate the acquisition due to concerns that it may reduce local competition in certain areas. A decision on this by the regulator is "imminent" but it is not really a major concern for Questor which rates the stock a 'hold'. Even though the shares
have soared by more than 50 per cent this year, they are still yielding 3.2 per cent rising to 3.4 per cent.
SIG last year complained the harsh UK winter has hit its business. This year the winter was much worse, both in the UK, where SIG gets 45% of its business, and on the Continent, The Times' Tempus column noted. It is therefore hard to discern where the business is going. The slow start of the Government's Green Deal insulation programme was another negative. Without this, sales in the UK were probably up by nearly 1.0% in a falling market. Underlying pre-tax profits were therefore off from £35.5m last time to £30.2m, on turnover little changed. Of more significance is the strategic review put in place by Stuart Mitchell, the new Chief Executive. It will involve more efficient procurement, slimming down the branch network and boosting customers' use of e-commerce. The shares, off 10p at 178p, sell on more than 17 times earnings, which looks high enough until more of that detail is given.
Tobacco companies such as Imperial Tobacco have continued to perform well despite stricter regulations, according to the Financial Times' Lex column, Imperial Tobacco has two-thirds of operating profits coming from developed markets and is hugely exposed to the challenges facing tobacco groups. In its nine-month trading update on Thursday, the company reported volumes that were down by 7.0% but sales only fell 3.0%. Price increases in Europe helped to offset declining demand. Higher taxes and regulation are not hurting revenues to the same extent as volumes. Still, even harsher regulation may limit pricing power in the future. Australia started enforcing plain cigarette packaging last December. If consumers cannot differentiate between brands, they may focus instead on price. Tobacco companies are scrambling for other sources of growth. Both British American Tobacco and Imperial have been investing in electronic cigarettes as it is thought 1.0m of the UK's 10m smokers are now inhaling them.
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