Imperial Brands reported a performance in line with its five-year-plan expectations in the year ended 30th September 2023, with new product and market launches boosting its next-generation product (NGP) net revenue growth.
Net revenue was down slightly by 0.2% to £32.47bn, offset by NGP revenue that saw an increase of 26.4% over the year – driven by growth across all categories and led by Europe, where NGP revenue increased by 40.4% to £220m for the full year.
“We now have credible propositions across all categories – vape, heated tobacco and oral nicotine,” said CEO Stefan Bomhard. “Following recent launches, we now offer consumers potentially reduced-harm choices in more than 20 European markets, as well as the United States. This step-up in investment in Europe has driven an acceleration in net revenue growth.”
He added that the company expects the continuing benefits of the transformation to enable a further acceleration in adjusted operating profit growth in the final two years of its five-year strategy.
“We look forward to building on our growing operational track record”, said Bomhard, “to deliver sustainable returns to shareholders and to play a positive, distinctive role in this industry’s transition to a healthier future.”
Investments in NGP
The UK-based tobacco group said it had launched its new heated tobacco offering, Pulze 2.0 and iD, across seven European markets. In modern oral, growth in Zone X, and Skruf Super White were supported by flavour launches.
Further, the company announced that, in 2024, it will launch a new modern oral range under the brand “Zone”, following the acquisition of a range of US pouches from TJP Labs in June for £65m (CAD108.8m).
Imperial said the move facilitated its entry into the US modern oral nicotine market through its local subsidiary, ITG Brands. The Canadian manufacturer will keep producing the pouches to be sold by ITG, which is expected to market 14 pouch variants for adult users in the US.
Imperial will then perform further consumer testing before rebranding the products, the company said.
Meanwhile an all-new Blu 2.0 e-cigarette device is now available nationally in nine markets, while the disposable Blu Bar is now available in 11 markets.
Consolidating current markets
“We will continue to be disciplined and will now aim to consolidate momentum in our current markets”, the company said. “This means investing only in markets where NGP categories account for a material proportion of the overall nicotine market and where we have a strong route to market.”
However, due to higher investment related to new products and market launches, NGP adjusted losses increased by 48.3% to £135m.
Next year, the company expects to deliver low-single-digit constant-currency revenue growth and to grow its constant-currency-adjusted operating profit, close to the middle of its mid-single-digit range.
Performance will be weighted to the second half of the year, driven by the phasing of its pricing in the prior year and investments in NGP. As a result, first-half operating profit is expected to grow at low single digits at constant currency.
– Antonia Di Lorenzo TobaccoIntelligence staff