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Imperial Brands PLC on Tuesday reported a fall in profit and revenue in its recent financial year, as the cigarette maker was hit by charges related to its exit from Russia and associated markets.
Pretax profit dropped by 21% to £2.55 billion in the financial year that ended September 30 from £3.24 billion the previous year. Revenue edging down 0.7% to £32.55 billion from £32.79 billion a year before.
The Bristol, England-based tobacco firm explained the decrease in revenue was primarily driven by a weaker euro, though tobacco volumes also declined by 4.7% against the previous year.
Administrative expenses increased by 75% to £1.33 billion from £763 million, while finance costs rose by the same percentage to £1.72 billion from £979 million. Cost of sales were reduced to £26.51 billion from £26.76 billion, in line with the lower revenue.
"Our plans include higher than historical inflation impact to cost of sales driven by commodity price increases, energy and logistic costs, as well as higher people costs," Imperial said.
Despite the lower profit, the company increased its annual dividend by 1.5% to 141.17 pence per share from 139.08p a year ago.
Since October, Imperial also has been returning surplus capital to shareholders via a £1 billion share buyback, which will be concluded by September 2023.
Looking ahead, Imperial said it continues to expect low single-digit constant currency net revenue growth over the next three years. It added that performance in its new financial year will be weighted to the second half due to the phasing of next-generation product investment, the impact of its Russian exit, and the continued unwind of Covid-19.
Meanwhile, noting current rates, Imperial expects a foreign exchange translation tailwind of around 5% to 6% to net revenue, adjusted operating profit and earnings per share.
"We remain confident in our plans in the face of current macro-economic challenges with potential pressure on consumer spending and high inflation. And as we align our business more closely with the secular consumer trend towards healthier moments of relaxation and pleasure, we believe we are well placed to generate long-term value for shareholders and all our stakeholders," said Chief Executive Officer Stefan Bomhard.
Imperial Brands shares were 1.5% higher at 2,068.00 pence each in London on Tuesday morning.
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