Imperial Brands lights up as e-cigarette demand, reassurances on Russia impacts

May 17, 2022 11:47 AM ETImperial Brands PLC (IMBBY), IMBBFBy: Kevin P. Curran, SA News Editor1 Comment

Swirling smoke

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Imperial Brands (OTCQX:IMBBY) shares took off to their largest daily-gain in years after reporting stronger-than-expected earnings on Tuesday.

The Bristol, England-based tobacco giant reported non-GAAP EPS of 112.6p for the first half of its fiscal year alongside £15.36 billion in revenue. Strong revenue for the six months ended March 31 was noted as being driven by next generation, non-combustible products like Pulze heated tobacco and blu e-cigarettes, which saw a 8.7% jump in the period.

The core business, meanwhile, saw solid growth, especially in duty-free shopping as travel returned with gusto after pandemic shutdowns. Tobacco revenue grew 0.1% in the period as higher prices made up for a slight reduction in sales volume.

"These results provide further evidence that we have achieved the stabilization of our core combustible business," said CEO Stefan Bomhard. "During the first half of the year, we increased aggregate market share in the five priority markets which account for around 70% of our operating profit, while maintaining pricing discipline."

The strength in these businesses assuaged some concerns on the impact of Imperial’s pullout of the Russian market. Per the earnings release, charges associated with the withdrawal totaled £225 million. Without this charge, revenue would have increased year over year rather than the slight decline reported.

Shares of the British tobacco company rose nearly 10% in mid-day trading on Tuesday, turning positive for the year to date. Overall, the spike in shares appears to reflect growing confidence in the company's turnaround strategy under CEO Stefan Bomhard.

The German-born businessman has helmed the firm since October 2020 wherein he was tasked with stemming a steady downward trend for shares. Thus far, his efforts appear to be bearing fruit.

Read more on the details of the quarter.

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