May 18, 2022
Imperial Brands is on track to meet its full-year goals helped by strong sales of e-cigarettes and heated tobacco in Europe, it said on Tuesday (May 17), despite plunging profits after the cigarette-maker opted to exit the Russian market.
Sales of Imperial’s next generation brands, which include Pulze heated tobacco and blu e-cigarettes, were up 8.7 percent to £101m.
As part of its five-year strategy, the group is placing greater focus on boosting demand for heated, modern oral and vaping goods and growing market share in its five biggest combustible territories.
It noted growth in the UK was buoyed by stronger investment in local jewel brands, particularly cigarette brand Embassy, and ‘relatively stable’ market share in the vaping brand blu.
Around a quarter of the decline in profitability derived from exit charges related to the Bristol-based firm’s departure from Russia following the full-scale invasion of Ukraine in late February.
In early March, it suspended all operations in the country, including all marketing and sales activity and production at its Volgograd factory, before transferring them to local investors four weeks ago.
After years of slow growth and market share losses, Imperial chief executive Stefan Bomhard laid out a turnaround plan in 2021 focused on its five top markets and expanding next-generation products (NGP) deemed less harmful to health. Together, the United States, Britain, Germany, Spain and Australia account for over 70 percent of Imperial’s revenue.
“These results provide further evidence that we have achieved the stabilisation of our core combustible business.During the first half of the year, we increased aggregate market share in the five priority markets, while maintaining pricing discipline,” Bomhard said.
“This strong performance is an outcome of our tighter performance management and disciplined investment in sales execution and brand building.”
Bomhard said they will be rolling out Pulze and iD heated tobacco to further European markets and extend blu in the US. The company has also started a pilot in France for an all-new vapour device, which will be the first new NGP product from their redesigned innovation pipeline.
“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,” he said.
Imperial’s results came about a week after its rival Philip Morris International’s $16 billion (£13bn) bid for smaller rival Swedish Match highlighted the urgency with which cigarette makers are trying to tap new and potentially less harmful alternatives.