Cigarette maker Imperial Brands sees profits rise as US market share increases
The company’s next generation products category, which includes vapes, saw revenue rise by one-fifth.
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Your support makes all the difference.Cigarette maker Imperial Brands has reported a healthy rise in profit as it managed to put up its tobacco product prices to offset a fall in sales.
The business said that it had increased its aggregate market share across its five highest priority countries: the US, Australia, Spain, Germany and the UK.
It captured an extra 20 basis points of the combustibles market – cigarettes and rolling tobacco – in these countries, Imperial said.
The growth was driven by rises in the US, Australia and Spain which offset falls in the other two markets.
The maker of Blu e-cigarettes and iD heated tobacco sticks said that its next generation products (NGP) portfolio, which includes vapes and other categories, saw revenue rise by nearly one-fifth in the first half of the financial year.
While the traditional cigarette market is in decline, Imperial has taken advantage of rising prices to grow that business’ market share over the last six months
Pre-tax profit rose from £1.3 billion to £1.4 billion in the six months, Imperial said, with revenue rising 0.3% to £15.4 billion.
“Business performance for the first half of fiscal year 2023 was resilient, despite temporarily increased volume declines against a strong comparator,” said chief executive Stefan Bomhard.
“As expected, this reflects a return to pre-COVID buying patterns as well as our decision to exit Russia last year.
“In tobacco, we have delivered further share gains in aggregate across our portfolio of top five markets, while also achieving strong pricing to help mitigate the volume declines.
“We have now recorded stable or growing aggregate market share in these markets in each of the last four six-month periods after many years of sharp declines.
“In NGP, we have delivered a step-up in innovation with new product and market launches in all three categories: vapour, heated tobacco and modern oral.”
Chris Beckett, head of equity research at Quilter Cheviot, said: “Imperial’s results this morning are a good reminder, for those without ethical investment considerations, of the attractions of a tobacco stock – low valuation, strong cash flow, a high dividend yield and share buybacks.”
He added: “While the traditional cigarette market is in decline, Imperial has taken advantage of rising prices to grow that business’ market share over the last six months.
“Furthermore, its next generation products, such as heated tobacco and vaping increased sales 20%.
“This part of the business only represents 7% of the group, so it will be looking to increase this over time as more and more people shift to less harmful products.”
Shares in Imperial Brands dropped 0.7% on Tuesday morning.