Tobacco giant Imperial brands has reported a surge in profits for the financial year as demand for smoking alternatives such as vapes continues to grow.
The Bristol-headquartered company saw revenues rise to £32.4bn over the 12 months ended September 30 with next generation product revenue up 26%. Adjusted operating profit for the period was ahead of expectations, rising 4.6% to £3.9bn - up from a forecast of 4.3%.
The London-listed business said higher tobacco prices offset volume declines, with tobacco adjusted operating profit increasing by +2.5%.
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Stefan Bomhard, chief executive, said: “These results demonstrate how we are fulfilling our role as an effective challenger for the industry, able to deliver consistently against operational and financial expectations.
“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. This was supported by an encouraging stabilisation in German market share for the first time under our strategy."
Imperial said it was "on track" to deliver five-year capital returns of around £10bn, representing 67% of its market capitalisation in January 2021 when it launched its strategy.
Derren Nathan, head of equity research at Bristol-based Hargreaves Lansdown, added: “Imperial Brands’ full-year results showed that cigarettes are continuing to fall out of fashion, with tobacco volumes declining by 4%.
"But this is a dynamic the group is navigating well, managing to drive revenue and profits in the right direction through a combination of strong pricing and impressive growth in next generation products (NGP)."
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In October, Imperial increased shareholder returns on the back of new product growth and a reduction in debt.
The Winterstoke Road-based firm said capital returns to stakeholders for the financial year ending 2025 would rise to around £2.8bn, including a share buyback of £1.25bn - an increase of 13.6%.