(Adds adjusted results, outlook)
LONDON May 7 Imperial Tobacco Group posted a sharp decline in earnings on Wednesday due to planned inventory reductions in a number of markets, but stood by its full-year profit target.
For the half-year to March 31, revenue fell 5 percent to 12.7 billion pounds ($21.6 billion) on a reported basis, with operating profit down 17 percent to 999 million pounds.
To streamline supply of its cigarettes, Imperial is working with wholesalers and distributors to reduce the amount of inventory they keep on hand.
The company said the reduced stock should cut down on the time it takes for cigarettes to get from factory to consumer. The impact on first-half results was in line with the company's expectations, Chief Executive Alison Cooper told reporters.
Imperial Tobacco, which makes Davidoff and Gauloises cigarettes and is the world's No. 4 international tobacco company by market share, said its core tobacco business saw net revenue decline 5 percent, hurt also by currency fluctuations.
Excluding currency and the impact of the inventory reductions, tobacco net revenue rose 2 percent, with volume of its top growth brands rising 4 percent.
The company stood by its full-year guidance for "modest" growth in adjusted earnings per share at constant currency rates and dividend growth of at least 10 percent.
Its cost-cutting program, which includes the shutting of cigarette factories in France and England, is on track to deliver incremental savings of 60 million pounds ($101.95 million) for the full year. ($1 = 0.5885 British Pounds) (Reporting by Martinne Geller in London; editing by Erica Billingham)