Imperial profits for 2023 beats forecasts; Vaping revenues rise by a quarter

British tobacco giant Imperial Brands on Tuesday reported a 3.9 per cent rise in adjusted operating profit for year ending September 30, beating average analyst forecasts of 3.5 per cent.

The figure excludes the impact of foreign exchange and Imperial’s exit from Russia.  

Imperial, which makes vaping brand blu and traditional cigarettes including Davidoff, Gauloises and Winston, forecast revenue and profit growth next year, but said it would be slower in the first half due to this year’s price rises and investments in tobacco alternatives.

Combustible tobacco performance improved with 10 basis points aggregate market share growth in top-five priority markets and strong, broad-based pricing gains.

In the ‘next generation’ category net revenue went up by 26 per cent as momentum grows in all categories. In Europe, the category has grown by 40 per cent.

“Three years into Imperial’s transformation, our investments in consumer capabilities, changes to the way we work, and a new performance culture are translating into stronger, more sustainable operational and financial outcomes,” Stefan Bomhard, chief executive, said.

“In combustible tobacco, improving brand equity and investment in our salesforce capabilities has led to the third consecutive year of stable or growing aggregate market share in the five priority markets which account for 70 per cent of our operating profit. At the same time, we have offset structural volume declines with strong pricing in all key markets.

“In next generation products, our challenger approach, which combines partnership-based innovation with disciplined market entry, is delivering positive results.”

Bomhard added that the company expected profits to rise next year and beyond.

“Looking ahead, we expect the continuing benefits of our transformation to enable a further acceleration in our adjusted operating profit growth in the final two years of our five-year strategy.”

Imperial expects low single-digit 2024 revenue growth and adjusted operating profit near the middle of its mid-single digit range.

However, it said performance will be weighted to the second half of the year, with adjusted operating profit likely growing by low single digits in the first half.

Imperial also raised its annual dividend by 4 per cent.