Imperial Brands shares rise despite declining earnings after leaving Russia as e-cigarettes boost Golden Virginia owner
- Imperial Brands’ revenue for the first half of the year fell by more than 800 million pounds to 1.04 billion pounds
- Reported revenues also declined modestly due to lower excise taxes in Europe
- Shares of the company this morning were the highest growth on the FTSE 100 index
Imperial Brands’ profits fell after the cigarette maker decided to withdraw from the Russian market.
But Imperial Brands shares rose 7.2 percent to £ 18.36 at the start of trading as the owner of the Rizla and Golden Virginia brands said he was on track to reach his full-year forecast.
Based on the constant currency, net income is projected to grow by about 0-1 percent this year, in part due to higher prices, while adjusted operating income will increase by about 1 percent.
Dive: Revenues of the multinational tobacco company that owns the blue vaping product fell by more than £ 800 million to £ 1.04 billion in the six months to March 31
And this despite the fact that the profits of the tobacco multinational company, which also owns Gauloises and a product for vaping blu, fell by more than 800 million pounds to 1.04 billion pounds in the six months to March 31.
About a quarter of the decline in profitability was due to exit fees associated with the firm’s departure from Bristol from Russia following a full-scale invasion of Ukraine in late February.
In early March, it suspended all operations in the country, including all marketing and sales activities and production at its Volgograd plant, before handing them over to local investors four weeks ago.
This action also contributed significantly to the fact that the operating profit of the FTSE 100 fell by more than a quarter to 1.2 billion pounds.
However, Imperial Brands suffered a much bigger financial blow due to the fact that two years ago there were no recurring profits from the sale of its premium cigar companies, which included a 50 per cent stake in Cuban cigar maker Habanos, for £ 1.1 billion.
It was also affected by a slight decline in reported revenues due to lower excise taxes in Europe, although net income rose modestly due to higher tobacco prices and higher demand for next-generation products (NGPs).
Cigar sales: Imperial Brands suffered a severe blow as a result of unique revenue from the sale of premium cigar companies, which included a 50 percent stake in Cuban cigar maker Habanos
As part of its five-year strategy, the group is focusing on increasing demand for heating, modern oral products and vaping, and growing market share in the five major burning areas.
These territories are the United Kingdom, the United States, Australia, Germany and Spain, and account for about 70 percent of the firm’s operating income.
During the first half of fiscal year, Imperial Brands said its market share had weakened in the last two markets, although this was more than offset by expansion in the UK, US and Australia.
Along with this, the group noted positive feedback from tests of the Pulze tobacco heating system in Greece and the Czech Republic, as well as from the Blu vaping brand in North Carolina.
CEO Stefan Bomhard said that 18 months after launching the strategy, he was “pleased with the progress we are making”.
He added: “Our focus by the end of 2022 will be to continue investing in our five priority markets and begin deploying our NGP strategy.”
“Although these are uncertain times as we move to 2023, we will have the capabilities and culture needed to support the next phase of our strategy and ensure sustainable shareholder value growth.”