Tobacco group Imperial Brands (IMB.L) on Tuesday said 2022 would be another year of reorganisation after it posted a higher-than-expected rise in full-year profits, aided by increased cigarette prices and smaller losses in its e-cigarettes business.
Chief Executive Stefan Bomhard has been trying to steady the business after years of sluggish growth and market share losses. He laid out a five-year turnaround plan in January to take Imperial back to its cigarette-selling roots and focus on five markets that generate nearly three quarters of its profit.
On Tuesday, the former boss of car dealer Inchcape (INCH.L), said he was seeing “encouraging early progress,” pointing to an arrest in aggregate market share declines in its priority markets, which fell only 2 basis points this year compared to 17 basis points last year.
He also highlighted a more than 50% reduction in losses in its next generation products (NGP) business – e-cigarettes, tobacco-heating products and oral nicotine – helped by exits from markets such as Japan and Russia.
Bomhard, however, said 2022 would see Imperial making further changes to strengthen “the foundations” of its five-year plan. This would include, further internal business re-organisation and significant investments in marketing and sales, mainly in the second half of the year.
The higher investments will result in adjusted operating profit growing slightly slower than net revenue growth in fiscal 2022. Net revenue growth is anticipated to be similar to that in 2021.
Losses in its NGP business, which were 138 million pounds ($185.58 million) in fiscal 2021, are also expected to be around the same level in 2022 as the company invests in market trials in countries including the Czech Republic and Greece.
The Bristol-based company’s shares were up 1.35% at the open. The stock is up nearly 4% so far this year.
The maker of Gauloises and West cigarettes reported organic adjusted group revenue of 7.59 billion pounds ($10.20 billion), up 1.4% in constant currencies, for the full year ended Sept. 30. Adjusted earnings per share came in at 247.1 pence, above the 244.5 pence analysts had forecast.
The company said tobacco price mix was up 4.4% during the year which helped to offset a 2.9% decline in overall volumes.
($1 = 0.7444 pounds)