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Imperial steps up NGP efforts amid volume declines

07 Nov 2017. Total tobacco volume at Imperial Brands for the year 2017 was 4.1 per cent down on last year. As it announced the preliminary results for the year ended 30 September, Imperial said it will be “significantly stepping up” activity in the Next Generation Product (NGP) segment in 2018.

Imperial shipped 265.2 billion sticks equivalents in 2017, down 4.1 per cent on the 276.5 billion shipped last year. Wider tobacco industry volume declines for the period were 4.4 per cent. The company cited an increase in shipments of growth brands and strong performance in priority markets as reasons behind improvements in revenue and profitability for the second half of the financial year.

Growth brand volumes increased by 5.5 per cent on last year with 159.6 billion units shipped. Imperial said performance of its growth brands led to market share gains in the priority markets that account for around 70 per cent of the cigarette maker’s operating profit. The company posted market share in the UK at 41.9 per cent, an increase of 80 base points, citing strong sales of growth brands Players cigarettes and Gold Leaf fine cut tobacco. Market shares of 33.8 per cent in Australia and 22.4 per cent in Germany showed increases of 50 and 20 base points respectively, led by growth brand JPS cigarettes.

Imperial said growth brands account for around 63 per cent of the Group’s tobacco net revenue, which increased 8.2 per cent on 2016 to reach GBP 7.757 billion (EUR 8.766 billion). Tobacco adjusted operating profit was GBP 3.595 billion, up 7 per cent on last year. Imperial Brands posted total revenues at GBP 30.247 billion, up 9.5 per cent from last year.

Chief Executive Alison Cooper called 2017 an “important year of progress”. She said that while the vapour segment remains priority for the Blu e-cigarette maker, the company will begin trials of its own heated tobacco product this year.

“Heated tobacco is currently a much smaller NGP category that is growing, most notably in Japan,” Cooper said. “While our investments will continue to be focused on supporting e-vapour we have developed options in heated tobacco which can be deployed if we see broad-based sustainable growth developing and we will begin consumer trials of our own heated tobacco products in December 2017.”