Imperial signals growing confidence in vaping
THE West’s biggest company yesterday continued to herald its move towards next generation smoking products as it published a strong set of annual results.
Imperial Brands - formerly Imperial Tobacco - reported an operating profit of £2.4 billion, an increase of 5.7 per cent.
The company, based on Winterstoke Road in the Ashton area of Bristol, also increased its dividend by 10 per cent to 187.8p per share.
It said it would increase its investment in its Blu vaping brand by £100 million in the next six months.
Alison Cooper, chief executive, said: “FY18 was a successful year of delivery against our strategy and I’m pleased with the progress we are making in creating something better for the world’s smokers.
“In NGP (Next Generation Products) our main focus is on transitioning smokers to blu, a significantly less harmful alternative to cigarettes.
“NGP also offers additive opportunities for our shareholders and the success of the international rollout of myblu has put us in a strong position to further invest and accelerate sales growth in FY19.
“In tobacco we focus on providing smokers with an evolving portfolio of high quality brands.”
Tobacco industry analysts had a broadly positive outlook on the results.
Steve Clayton, manager of the Bristol-based Hargreaves Lansdown Select UK Income Shares fund, which has a position in Imperial commented: “These numbers show Imperial’s strategy to drive value from its tobacco brands portfolio, while growing its next generation, potentially reduced risk product range is paying off.
“Dividends rise by 10% for the tenth year in a row, underpinning the yield attractions of the stock. Imperial Brands pays dividends quarterly and today’s announcement of a final dividend of 65.46p takes this year’s total payout to 187.79p, representing a full year yield of 7% on the current share price.
“Tobacco companies face constant challenges from regulatory bodies, and potential moves to reduce nicotine content by the US have been weighing on the sector. But these numbers showed Imperial developing a fast growing portfolio of vaping products with a heat-notburn product to launch early next year too. Next Generation Product revenues reached an annualised run rate of £300m in FY18 and are seen growing substantially in the next few years. Even so, traditional tobacco will remain the dominant driver of the group for some time yet.
“This was a solid performance by Imperial and the company looks to be navigating the seismic shifts in the industry well. In the long term, the future of tobacco will lie in their portfolios of potentially reduced risk products, and in the meantime, the traditional cash generation strengths of the tobacco sector look undiminished.”