Profit growth at Imperial Tobacco was broadly in line with expectations in the year to the end of September, helping the firm to raise its payout ratio and increase its full-year dividend by over a tenth, news which prompted a 1.9 per cent rise in the share price.

Tobacco net revenue in the 12 months to September 30th increased by 1% from £6,913m to £7,005m, a 4% increase on a constant currency basis. Growth in the company's 'key strategic brands' (Davidoff, Gauloises Blondes, West and JPS) was much better though at 13%.

Group adjusted operating profit increased by 2% (up 4% at constant currency) from £3,103m to £3,161m, while adjusted earnings per share rose 7% (up 8% constant currency) from 188p to 201p.

Meanwhile, stick equivalent volumes fell by 2.7% from 346.0bn to 336.6bn. The company attributed the majority of the decline to "ongoing market weakness in Ukraine and Poland and compliance with international trade sanctions in Syria".

The 'key' brands reported volume growth of 7% and now account for 30% of total stick equivalent volumes, up from 26% in 2010.

The group has increased its dividend payout ratio to 52.5% of adjusted earnings per share and is recommending a final dividend of 73.9p per share, bringing the total payout to 105.6p per share, up 11% year-on-year.

"We're generating high quality growth by investing in total tobacco brands that will deliver long-term sustainable sales. Revenues were strong across the portfolio and I'm particularly pleased with the excellent performances from our key strategic brands [...]," said Chief Executive Alison Cooper.

"Our portfolio offers consumers unrivalled choice and provides significant opportunities for further growth. Our focus on realising this growth potential, whilst effectively managing cost and cash, will continue to maximise value for our shareholders."

Regionally, the company was "strengthened by innovation" in the UK, with GlideTec packs rolled out nationally during the year. In Germany, overall markets were broadly stable, with cigarette volumes down 2% and fine cut tobacco volumes were up 3%, with strong growth in 'make-your-own' tobacco, up by 5%.

Spain saw ongoing difficulty in the economic conditions, with high unemployment and increasing government austerity measures, which placed further pressures on consumers and the duty paid tobacco market, with illicit trade a growing problem, the firm said.

In the rest of the EU, the firm said an improving market trend in other markets, such as the Netherlands and Czech Republic, with further market share growth elsewhere in the region including in Italy and Portugal.

The US remained very competitive, with the overall cigarette market estimated to be down by 4%.

In Asia-Pacific profits grew by 17% with excellent progress made in its market shares in several countries including Taiwan, Vietnam, Australia and New Zealand.

Panmure kept its buy rating on the stock, saying it is "encouraged by the strong growth in key strategic brands" and the good market share progression in the majority of markets disclosed, but did note a change in the list of markets disclosed.

Meanwhile, both Jefferies and Investec kept their hold rating on the stock, with the former noting market weakness in Poland and Ukraine, as well as sanctions in Syria, while the latter cited the fact that an impairment charge in Spain will "embarrass" the company.

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