Imperial Invests in Caffeine Products to Counter Smoking Slump -- Update
May 03 2017 - 4:25AM
Dow Jones News
By Saabira Chaudhuri
LONDON-- Imperial Brands PLC is investing in a caffeine-based,
low-calorie product designed to give users a boost of energy as the
tobacco company works to combat the impact of declining smoking
volumes.
"We are increasingly looking into other areas where we can
satisfy some of these other needs particularly from millennial
consumers," Imperial's Chief Financial Officer Oliver Tant told
reporters.
The remarks came as Imperial, which makes the JPS and Gauloises
brands, said net profit rose to GBP675 million ($871 million) in
the six months ended March 31 from GBP290 million a year earlier.
Revenue rose to GBP14.3 billion from GBP12.81 billion.
The results were helped investment income, which rose to GBP730
million from GBP290 million a year earlier. Operating profit fell
to GBP902 million from GBP1 billion.
Total tobacco volume fell 5.7% in the period to 126.3 billion
sticks, a deterioration from the 3.1% decline seen a year earlier.
Tobacco net revenue climbed 9.3% but dropped 5.5% at constant
currency.
Imperial, the third-largest cigarette company in the U.S., said
its Winston and Kool brands had increased market share over the
half while mass market cigars are performing well.
Imperial in 2015 launched a trial version of the energy boosting
product, called Reon, sold in Manchester and online that was
designed as a strip intended to melt in one's mouth. Wednesday Mr.
Tant said Imperial continues to invest in this product, which could
be delivered through a variety of formats, including powders and
liquids, but isn't yet looking to commercialize it.
U.K.-based Imperial's results come as the regulatory environment
for traditional cigarettes continues to toughen. The country will
later this month implement plain packaging, under which cigarettes
will be sold in uniform packs stripped of distinctive logos and
colors, and adorned with graphic health warnings. Australia and
France also have plain packaging laws in place and other countries,
such as Ireland and Hungary, are on a path to similar
legislation.
On Wednesday, Imperial's Chief Executive Alison Cooper said the
company is working to simplify its brand portfolio to better manage
the impact of plain packaging but said Imperial has seen profit and
sales growth in Australia despite the industry no longer having the
ability to brand cigarette packs there after a law passed in
2011.
Imperial is on track to meet consensus analyst estimates for the
full year, said Ms. Cooper. Analysts currently expect adjusted
per-share earnings of GBP2.77 on tobacco net revenue of GBP7.9
billion.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
May 03, 2017 04:10 ET (08:10 GMT)
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