Strategic objectives

We deliver our strategy by actively pursuing three primary objectives:

Sales Development

We are growing our business internationally through organic growth and acquisitions.

Strong Geographic Footprint

We have a strong international profile, with our products sold in over 160 countries.

We see opportunities, both organic and acquisition-led, to enhance and extend our existing operations in our Rest of Western Europe, United States and Rest of the World regions, with our strong positions in the UK and Germany continuing to be key contributors to our overall results.

Our historical roots are in the UK and we have held a significant position in Germany since our acquisition of Reemtsma. In both these markets, our strategic focus is the profitable development of our strong portfolio cross all product groups.

We operate in Western Europe with important markets including the Netherlands, the Republic of Ireland, France, Belgium, Luxembourg, Spain, Portugal, Greece and Italy. In these countries we are focused on building our cigarette market shares, along with strengthening our position in fine cut tobacco and rolling papers.

Outside Western Europe we have strengths in sub-Saharan Africa, the Middle East, selected countries in Central and Eastern Europe, Asia and Australasia and in Duty Free. Our key markets within these regions include the Ivory Coast, Saudi Arabia, Poland, Russia, Ukraine, Taiwan and Australia. Our strategy continues to be focused on developing our international strategic and regional brands and expanding our presence in both existing and new markets. Our recent acquisition of Commonwealth Brands gives us an established platform from which to grow in the US market.

We continue to seek acquisitions which increase both our international scale and penetration of our targeted markets, particularly where those businesses have highly complementary geographic profiles and strong brand portfolios.

Broad Product and Brand Portfolio

Our broad product and brand portfolio includes international cigarette brands such as Davidoff and West and strong regional and local brands such as JPS, Fortuna, Gitanes, Lambert & Butler, Classic, Maxim, Excellence and Horizon. Complementing our cigarette portfolio is our world leadership in fine cut tobacco, rolling papers and tubes with brands such as Golden Virginia, Drum and Rizla. To ensure we continue to leverage and build brand equity, our brand strategy takes a portfolio approach responsive to individual market dynamics and price segmentation.

Cost Optimisation and Efficiency Improvements

Our continued focus on reducing costs and improving our efficiency supports our sales development. Our ongoing search for productivity improvements, through the effective use of our assets and by optimising our manufacturing capacity, is the primary driver of our manufacturing strategy. We seek continuous performance improvements and believe there is further potential for cost savings through our ongoing programme of standardisation and the extension of best practice across all our manufacturing facilities, while safeguarding our reputation for quality, flexibility and innovation.

This cost focus extends beyond manufacturing and, throughout Imperial Tobacco, our culture is focused on cost optimisation and shareholder value creation.

Effective Cash Management

Imperial Tobacco is a highly cash generative business. Our focus is on managing capital expenditure and working capital, tax and interest costs. Our strategy is to ensure that the cash we generate is used efficiently through acquisitions, organic investment and returning funds to our shareholders, adding to our value creation.

We have invested more than £17 billion in acquisitions since our listing on the London Stock Exchange in 1996 and have returned over £0.8 billion to shareholders through our share buyback programme. We are committed to continuing to expand our business through both acquisitions and organic investment opportunities. Our dividend policy is to increase dividends broadly in line with growth in adjusted earnings per share, with a payout ratio of around 50 per cent.