Tobacco giant Imperial Brands has reported a dip in revenue despite double-digit growth in its electronic cigarettes division and growth in its traditional tobacco division.
The company told markets this morning that net revenue from tobacco and ‘next generation’ products rose 4.6 per cent in the year ended September 30.
Adjusted earnings per share rose 1.09 per cent, while reported earnings per share rose 19.1 per cent.
Overall revenue, which adds duties and peripheral products, fell by 0.2 per cent, to £32,411m, from £32,475m in 2023.
With smoking on the decline across much of the Western world – tobacco volumes declined four per cent during the year – many cigarette companies have started to invest in ‘next generation’ tobacco products like electronic cigarettes and vapes, which are intended to be less harmful to smokers than traditional cigarettes.
Imperial said its revenue from these products grew 26 per cent. However, Imperial’s next-generation revenue remains much lower than for tobacco, with the former representing only around eight per cent of tobacco’s net revenue.
Chief executive Stefan Bomhard said that the tobacco markets remains strong. “In tobacco, investment in our brands and sales force initiatives have delivered aggregate market share gains across our five priority markets, while delivering strong pricing,” he said.
The demand for tobacco is despite growing regulatory pressure on the tobacco and vaping industry. While a proposed plan to ban smoking in pub gardens was walked back, the UK will ban the marketing of vapes to Brits under 18.
Bomhard added: “In next generation products (NGP), we continue to build scale across our footprint with net revenues up 26.4 per cent at constant currency driven by growth from all three regions [US, UK, Australia] and market share growth in all three categories.
“Our partnership approach to product innovation has enabled us to launch new products across all three categories during the year. This included our successful entry to the fast-growing modern oral category in the US with our brand ‘Zone’.
“Given the strong momentum in our NGP business, we will continue to invest to drive another year of double-digit constant currency net revenue growth, while balancing our objective to build a sustainable and profitable business,” Imperial said.