Imperial Brands PLC (LSE:IMB) said it is making “good progress” with its five-year strategic plan to change its focus from tobacco products to tobacco alternatives and is on track to report full-year results in line with guidance.
In the six months to end March 2022, revenue fell 1.3% from the same period last year to £15.36bn, due to lower excise duty in Europe. Net revenue was 0.3% higher at £3.5bn, comprising 0.1% growth in tobacco products and 8.7% growth in new-generation products (NGP) to £101mln, boosted by strong progress in Europe.
Tobacco volume fell 0.7%, with volume declines in Europe partly offset by a strong performance in the Americas and Africa, Asia and Australasia region.
Adjusted operating profit grew 2.9% to £1.6bn, driven by a 49.9% reduction in losses in NGP. Reported operating profit fell 26.6% to £1.2bn, following charges of £201mln on the company’s exit from Russia. Also, last year’s figure included gains of £281mln on the sale of the group’s Premium Cigar Division.
The group said price mix was relatively weak in the first quarter but improved markedly in second quarter on the back of price increases in several key markets, which will support a stronger price mix performance in the latter half of the year. Tobacco price mix in the first half was +0.8%, reflecting pricing of +1.2% and adverse mix of -0.4%.
Imperial Brands said it increased its aggregate market share in its five priority markets, which account for around 70% of operating profits.
The company also said it received positive consumer feedback on its recent NGP trials. It now plans to roll out its Pulze and iD heated tobacco products to more European markets, while in the US vape segment, it is extending its ‘blu’ marketing proposition.
"We are now 18 months into our five-year strategy to build a more sustainable Imperial capable of consistent growth - and I am pleased with the progress we are making,” commented chief executive Stephen Bomhard.
The group forecast full-year net revenue growth of around 0-1% and adjusted operating profit growth of around 1%, at constant currency.
It said it is “well placed” to manage inflationary pressures and other economic headwinds through cost initiatives, high gross margins and pricing.
"Our focus for the remainder of 2022 will be to invest further in our five priority markets and begin the roll-out of our NGP strategy. While these are uncertain times, as we move into 2023, we will have in place the capabilities and culture necessary to support the next phase of our strategy and deliver sustainable growth in shareholder value," concluded Bomhard.
The company is paying an interim dividend of 42.54p, up 1% on last year.
Shares were 5.08% higher at 1,799.50p in opening trade.