CIGARETTE maker Imperial Brands yesterday reported a 27 per cent spike in operating profit on last year, while its foray into vaping and e-cigarettes also proved lucrative.

The London-listed firm said it made £1.53bn operating profit in the six months ended 31 March, with revenue for its 'next generation products' (NGPs) offering an alternative to tobacco up by a fifth.

Imperial Brands did, however, say its volumes continued to be impacted by both the tail end of the pandemic and exit from Russia last year, as well as investment in NGP.

Shares dropped around 1.5 per cent. The results mark the third year of the firm's five-year strategy launched by chief Stefan Bomhard in 2021, which largely focuses on a reset in NGP products in a bid to maintain profits long term.

Bomhard said the company was now "moving from the initial foundation-building phase to a period of improving financial delivery".

"We remain strongly committed to an ongoing programme of shareholder returns and will complete our initial £1bn buyback during the second half," Bomhard said.

Chris Beckett, head of equity research at Quilter Cheviot, said the results were "a good reminder, for those without ethical investment considerations, of the attractions of a tobacco stock - low valuation, strong cash flow, a high dividend yield and share buybacks".

(c) 2023 City A.M., source Newspaper