- Imperial said net revenues rose by 2.8% in the six months ending March
- Tobacco prices expanded by 8.6%, offsetting a 6.3% drop in volumes
Higher tobacco prices helped Imperial Brands achieve its best organic sales growth in more than a decade.
The Golden Virginia and Rizla brand owner revealed net revenues from tobacco and next-generation products rose by 2.8 per cent in the six months ending March.
Tobacco prices expanded by 8.6 per cent, offsetting a 6.3 per cent drop in volumes amid broader market declines as consumers increasingly turn to safer alternatives.
Growing sales: The Golden Virginia and Rizla owner revealed its net revenues from tobacco and next-generation products rose by 2.8 per cent in the six months ending March
Imperial’s revenue from next-generation products, such as vaping and nicotine pouches, jumped by 16.8 per cent thanks to significant growth in Europe, Asia, and Africa.
Turnover still fell by 2.3 per cent to £15.1billion due to adverse currency fluctuations, while operating profits dipped by £40million to £1.49billion.
However, the FTSE 100 company boosted market share in three of its five biggest markets – the US, Spain, and Australia – and said it was ‘firmly on track’ to hit its full-year guidance.
It anticipates net revenues growing by low-single-digits at constant currency levels and adjusted operating profits being ‘close to the middle’ of its mid-single digit range.
Imperial also expects to complete its £1.1billion share buyback programme, having already repurchased £604million so far, and return at least £2.4billion to investors.
Stefan Bomhard, its chief executive, said: ‘Investment in consumer capabilities, more agile ways of working, and further progress with our performance culture have made Imperial Brands a stronger business better able to deliver an acceleration in financial delivery.’
Bomhard is spearheading a five-year strategy at Imperial focused on growing market share in its core markets and developing non-tobacco products.
Demand for brands like Pulze, Skruf and Blu is growing but represents just a fraction of the Bristol-based group’s total sales.
Derren Nathan, head of equity research at Hargreaves Lansdown, noted: ‘It’s tobacco that’s still driving financial performance, and management are keeping their balance on the delicate tightrope of asking smokers to pay up more for their habit without collapsing demand.
‘Modest growth targets for this year and next remain intact, but for the valuation to enjoy a material re-rating, the rollout of next-generation products needs to accelerate.
‘Progress is moving in the right direction, but to move the dial, further investment is required, and investors need to be mindful of increasing regulatory scrutiny.’
Imperial Brands shares were 2.9 per cent higher at 1,878.5p on Wednesday morning, making them one of the FTSE 100 Index’s top risers.