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Imperial Tobacco sets its sights on e-cigarettes

Helia Ebrahimi & Kiran Moodley
Imperial Tobacco working on e-cigarettes: CEO

The CEO of Imperial Tobacco Group told CNBC that 2014 will be a key year for innovation as the group looks at products "adjacent to tobacco", including the e-cigarette, to deal with declining volumes and headwinds in its traditional markets.

Alison Cooper, CEO of Imperial, the world's fourth-largest tobacco group by sales with brands including Lambert & Butler and Golden Virginia, was speaking following the group's earnings announcement. Imperial posted net profit of 937 million pounds ($1.49 billion) for the year to Sept. 30, compared with 678 million pounds ($1.08 billion) last year. However, group revenue fell to 28.27 billion pounds ($45.14 billion) from 28.57 billion pounds ($45.61 billion) in 2012. Overall volumes also fell by seven percent.

Cooper emphasized that 2013 had still been a robust performance during a difficult economic environment and as the company initiated its strategic transition.

"2014 is a really key year for that transition around the brand portfolio, around the footprint and around those new consumer opportunities that we see," she said. "We probably aren't as noisy as other people may be around some of these innovation areas. We've got a lot going on. We've just bought the assets of Dragonite, which was the original e-cigarette inventor. We've got the original inventor of the e-cigarette as well on board as part of our team."

(Read more: E-cigarette sales are smoking hot, set to hit $1.7 billion)

However, while many competitors and commentators have stressed the huge potential of the e-cigarette market, Cooper was cautious over the sector and said that she was focused on consumer habits.

Imperial Tobacco's focus on quality of growth

"I think you've got to look at the category from a consumer perspective rather than just a e-cigarette perspective," she said. "I think there are opportunities in the consumer space adjacent to tobacco that we're very much active at looking at. This isn't purely an e-cigarette focus."

(Read more: Light up your portfolio with this tobacco stock)

Cooper said that the company saw huge potential in the U.S. market, something other firms did not always appreciate.

"It's a fantastic market the U.S. and I know for some companies they focus on emerging markets or so-called emerging markets for growth, but I think you've got to be a bit more sophisticated than that and see where the real growth opportunities are. The U.S. is a great profit market, it's something we see opportunities in."

In other news, Imperial said Non-Executive Chairman Iain Napier would retire from the company in February, and will be replaced by Mark Williamson, the current deputy chairman.

(Read more: E-cigarettes could significantly cut tobacco use: Study)