Tobacco giant Imperial Brands said it will sell businesses and roll out new vaping products in a drive to improve performance in a declining tobacco market.
The British tobacco company, which makes Gauloises, Kool and Winston cigarettes, reported slightly better-than-expected first-half results on Wednesday and affirmed its full-year outlook, predicting improvement in the second half of the year.
The upturn will be helped by the roll-out of new vaping products as part of its blu e-cigarette brand. Traditional cigarette sales volumes are declining across markets as more people quit the deadly habit.
Imperial shares, which had fallen by 30 percent over the past year, were up nearly 4 percent at 0830 GMT.
Divest Operations
Chief Executive Alison Cooper declined to describe what particular areas were ripe for divestitures, but said Imperial was initially targeting proceeds of up to £2 billion within the next 12 to 24 months.
"This will further simplify the business, enhance performance and release capital to pay down debt, deliver returns to our shareholders and, where appropriate, invest in our growth agenda," Cooper said.
She said there was no change to her view on the company's overall plans and strategy and denied Imperial was exploring "strategic options," as described recently in a UK newspaper.
The upcoming divestitures were welcomed by the market.
"We have previously highlighted the need for action of this kind ... and are pleased to see the company moving in this direction," said Investec analysts.
First Half Sales
Sales and profits in the first half of the year fell, hurt by a tough pricing environment and overall market declines, but results were slightly ahead of estimates.
Revenue was 3.53 billion pounds ($4.77 billion), slightly ahead of analysts' consensus estimate of 3.50 billion, according to a company-supplied consensus.
Reported sales volumes were down 2.1 percent, outperforming the industry in the markets it operates in, the company said.
Imperial's adjusted operating profit was 1.62 billion pounds, ahead of analysts' estimates for 1.52 billion pounds.
Earnings per share were 114.3 pence.
"We are on track to deliver on our full year expectations," said Chairman Mark Williamson.
Imperial is targeting constant currency revenue and earnings per share growth within its medium-term guidance, which calls for revenue growth of 1 to 4 percent and adjusted earnings per share growth of 4 to 8 percent. The company is also aiming to grow dividends by 10 percent.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
