Imperial Brands outlines second year of shake-up as profit rise

The maker of JPS cigarettes, Rizla and Blu saw annual pre-tax profits jump to £3.2 billion, up from £2.2 billion the previous year.

Holly Williams
Tuesday 16 November 2021 15:04
(Ally Carmichael/Imperial Tobacco Group/PA)
(Ally Carmichael/Imperial Tobacco Group/PA)

Tobacco giant Imperial Brands has pledged another year of change under its five-year overhaul plan as annual profits jumped higher.

The maker of Davidoff and JPS cigarettes, Rizla and Blu saw pre-tax profits jump to £3.2 billion, up from £2.2 billion the previous year, as its bottom line was boosted by last year’s £1.1 billion sale of its premium cigar business.

With the sale of the deal stripped out, Imperial saw underlying earnings rise 4.8% in the year to September 30 on a constant currency basis.

Boss Stefan Bomhard said it had been a year of “significant change”, with more to come in 2021-22 as the group continues to refocus on so-called next generation alternatives to cigarettes.

It announced plans in January for a five-year revamp, with the first two years of internal changes and cost cutting as part of a “strengthening” phase, with the group branding the final three years as the time of “acceleration” of returns.

It will be a year of further reorganisation and change as we strengthen our foundations for the future

Imperial Brands

Mr Bomhard said: “We have changed the way we work, placing the consumer at the centre of our decision making.

“We have simplified the organisation, creating efficiencies for reinvestment. And we have introduced more rigorous performance management, enabling better prioritisation of resources.”

The group added that 2022 “will be a year of further reorganisation and change as we strengthen our foundations for the future”.

This is set to see more internal restructuring and cost savings to invest in areas such as sales and marketing.

But investors appeared underwhelmed, with shares down nearly 2%.

This came despite a dividend payout hike to 139.08p a share for the full-year, up from 137.71p the year before.

Its results showed revenues lifted 0.7% to £32.8 billion thanks to rising tobacco and cigarette prices, as well as changes to consumer buying patterns in the pandemic.

It also narrowed losses in its e-cigarette arm by 56.7% to £138 million.

But the firm saw cigarette sales knocked by lower trade at airport duty-free stores due to restrictions on global air travel.

In the UK – which accounts for 9% of group net turnover – external revenues lifted to £4.6 billion from £4.5 billion the previous year.

It saw its market share rise in the UK, thanks in part to the launch of Embassy Signature, according to the firm.

Freetrade senior analyst Dan Lane said: “Get ready to hear all about the ‘strengthening’ and ‘acceleration’ phases from Imperial over the next few years.

“Behind the buzzwords, that means cost-cutting followed by finally making room for heated tobacco products.

“But, for all the gung-ho attitudes to the future this morning, Imperial is still pumping cash into the ways of the past.”

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