Imperial Tobacco's (IMT) shares were marked down after signs that the first quarter of this year could be tougher due to a rise in the illicit trade of cigarettes in the European Union and Russia. Management said the problem had grown to the extent that the size of the legal cigarette market had shrunk by 7 per cent.
The drag on Imperial's performance means that up to 55 per cent of its operating profit will now come in the second half. Imperial is also mirroring the trends seen at rival British American Tobacco (BATS), with emerging and rest of the world markets taking up the slack from weak European markets - which is why tobacco net revenue will still grow by 2 per cent in the half year. Imperial also increased its share of the market in economically troubled countries such as Spain.