Tobacco giant Imperial Brands has reported a big drop in profit after its withdrawal from Russia amid the ongoing invasion of Ukraine.
The Golden Virginia and Rizla owner said that the exit took £225m off its pre-tax profit, helping to push it down by 39% to less than £1.3bn in the first six months of the financial year.
Revenue dipped 1.3% to £15.4bn.
The Bristol-headquartered company employed 1,000 people in Russia in its sales and marketing operations and in its factory in Volgograd, before it sold these operations off to local investors in April.
The firm, which in a previous update noted weaker tobacco sales across Europe, said that rises in the cost of living have hit its industry in recent months as customers tighten their belts.
Across the industry, sales volumes have declined by 6.9%, largely due to the increased sales last year as Covid changed consumption patterns.
Imperial Brands said: “Volume decline rates have deteriorated further recently, reflecting some increased inflationary pressure on consumer spending.”
Chief executive Stefan Bomhard added the company had stabilised its traditional cigarette and tobacco business. It increased market share in five key areas where it makes 70% of its operating profit.
But the business has recently started to see more and more of its future in vaping and other similar products.
Mr Bomhard said: “In next generation products, consumers have given positive feedback on our recent trials, validating our new insights-driven approach.”
Two heated tobacco products, Pulze and iD, will be rolled out further in Europe while it is going to market blu – a vaping product – more in the US.
Mr Bomhard said:“Our focus for the remainder of 2022 will be to invest further in our five priority markets and begin the rollout of our NGP (next generation products) strategy.
“While these are uncertain times, as we move into 2023, we will have in place the capabilities and culture necessary to support the next phase of our strategy and deliver sustainable growth in shareholder value.”
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