Imperial Brands PLC (LSE:IMB) shares fell 7% after the tobacco giant announced half-year results in line with forecasts and said chief executive Stefan Bomhard will retire later this year, with current finance chief Lukas Paravicini taking the helm.
The FTSE 100 group said it was on track to meet its full-year guidance as it reported a 3.1% decline in revenue to £14.6 billion for the six months ended 31 March, with strong tobacco pricing but declining volumes.
Sales of tobacco and next generation products (NGP) increased 3.2% to £3.66 billion, supported by a 5.9% increase in tobacco pricing despite a 3.2% drop in volumes, which was better than analysts had forecast.
Adjusted operating profit rose 1.6% to £1.65 billion, in line with City estimates, driven by improved profitability in tobacco and lower losses in NGP.
“We have delivered another six months of broad-based constant currency growth across all regions, demonstrating the strength of our distinctive challenger approach and the benefit of long-term investments in our consumer capabilities, sales execution and performance culture,” said Bomhard, who has been CEO for the past five years.
Free cash flow stood at £2.4 billion and the group reduced its net debt only slightly to £10.5 billion.
Imperial announced an interim dividend increase of 78.5% to 80.16p, reflecting underlying growth and a rephased dividend schedule, moving to quarterly payments, as well as an ongoing £1.25 billion share buyback programme.
"Despite the uncertain global economic environment, we are on track to deliver our full-year results in line with our guidance, supported by tobacco pricing already taken in the first half and continued momentum in NGP," said Bomhard.
At constant currency, Imperial expects to deliver "low-single digit" growth in tobacco and NGP net revenue and for adjusted operating profit to be "close to the middle of our mid-single-digit range".
Looking beyond the current fiscal year, Bomhard said the group remains committed to the plans and medium-term guidance provided in our 2030 strategy in March, with the aim of generating "another five years of sustainable growth and long-term shareholder value through a progressive dividend and an evergreen share buyback".
Panmure Liberum analyst Rae Maile said the first half results were in-line with estimates and there was no change to FY guidance apart from the inevitable forex tweaks.
He said Bomhard has led for "five tremendous years", but with Paravicini stepping up from CFO "the transition will be seamless and there is no reason that any of the plans laid out at the recent investor event change at all".
"Importantly, Therese Esperdy will stay on as chair through the transition," Maile added.
** Update: Adds share price, analyst comment **