'Big Tobacco' firm Imperial Brands PLC's (LSE:IMB) in-roads into the smoking-alternatives industry is gaining pace, although these next generation products (NGPs), as Imperial Brands calls them, remain a small fraction of the group’s total sales.
Referring to the diversity of vapes, heated tobacco products and oral nicotine pouches, NGPs are expected to show net revenue growth of between 20% and 30% in Imperial Brands’ full-year results due in November.
Imperial Brands did not announce NGP sales as a percentage of total sales in today’s pre-close trading update, although they are likely to remain in the single digits.
In the first half of the current financial year, NGPs comprised 7.7% of UK product sales and 1.3% of sales in the Americas.
Despite the growing appetite for NGPs, they remain a lossmaker for Imperial Brands as the group continues to develop and roll these out products to customers.
Management today stated: “Our profit performance also reflects reduced NGP operating losses as we build scale while continuing to invest in line with our plans.”
These reduced losses have allowed Imperial Brands to increase its cash distribution to shareholders.
The company announced £2.8 billion of buybacks and dividends in the year ahead against £2.4 billion in the current financial year.