Imperial Tobacco remains resilient

The real pain for the company came in Spain – Imperial's third-largest single market following 2008's Altadis acquisition – and the Spanish business generated sales of £497m in the period. Unfortunately, that was 16 per cent lower in constant currency than 2010's outcome, although, according to chief executive Alison Cooper, that reflected a unique set of circumstances in the Spanish market. She says that price competition from brands such as British American Tobacco's Pall Mall, which was heavily discounted, along with a ban on smoking in public places and the impact of Spain's sickly economy, all combined to create a "perfect storm". Since then, pricing has returned to normal levels but Ms Cooper still expects to see a gentle decline in Spain this year.

But the contrast with northern Europe couldn't be starker. In Germany, for example – Imperial's biggest single national market – underlying sales climbed 3.5 per cent to £880m as consumers sought value brands and fine cut tobacco for rolled cigarettes, while a price rise in May helped boost the German operating profit by 7 per cent to £461m. The rest of the world unit, which includes Africa, the Middle East and Asia, also shrugged off the prevailing gloom in to record sales growth of 5.7 per cent in the period, to £2.34bn in total, with a corresponding 14 per cent rise in operating profits to £789m. Meanwhile, operating profits in the Americas remained roughly static at £242m, as a result of competitive pressure as rivals discounted in the second half of the year.

Prior to these results, RBS was forecasting pre-tax profit for 2012 of £2.34bn, giving adjusted EPS of 205.8p (from 187.6p in 2011).