The price of shares in FTSE 100 tobacco firm Imperial Brands (LON:IMB) dropped by 8.46% to 1,513.22p (as of 12:10 BST) after reported operating profits for the six months ended 31st March fell by 19.6%. Net revenues were down by 0.9% as the market for next generation products including vaping declined, but this was partly offset by growth in tobacco. Investment in the NGP range has been reduced in order to improve returns.
Interim CEOs Dominic Brisby and Joerg Biebernick commented: “While we delivered against our revised expectations, we are disappointed with these results, and we remain fully focused on all opportunities to strengthen performance.
“[…] Our enhanced focus on tobacco has driven stronger in-market execution and an improved share performance, with gains in most of our priority markets. We have reduced our NGP spend following the poor returns on investment last year and this, together with recent weaknesses in the vapour category, has resulted in lower NGP revenue.
“Overall, COVID-19 has so far had only a small impact on trading but we expect this to be more pronounced in the second half due to continued pressures on our duty free and travel retail business, changes in consumption patterns including downtrading and a reversal of some first-half inventory build.
“Agreeing the sale of our premium cigar business for €1.2 billion in the current climate was a major achievement and will further simplify the business and reduce debt. Deleveraging remains a key priority, such that the Board has decided to rebase the dividend by one-third to accelerate debt repayment, while retaining a progressive dividend policy, growing annually from the rebased level. This will strengthen the balance sheet and support a more flexible approach to capital allocation in the future“.