The tobacco company behind Golden Virginia and Rizla reported a big drop in profit as it took a hit from leaving Russia.
Imperial Brands said that the exit took a £225 million chunk out of its pre-tax profit, helping to push it down by 39% to less than £1.3 billion in the first six months of the financial year.
Revenue dipped 1.3% to £15.4 billion.
“In April, we delivered on our earlier commitment to exit Russia, with the orderly transfer of our business to local investors,” said chief executive Stefan Bomhard.
The business was one of hundreds of western companies to abandon the country after Vladimir Putin’s unprovoked invasion of Ukraine.
It had a factory in Volgograd and a sales and marketing business in the country, and employed around 1,000 people.
But amid hits, Imperial also reported that it is on track to hit its full-year results, and when stripping out one-off costs, pre-tax profits actually rose on an underlying basis.
Shortly after markets opened in London, the company’s shares had topped the FTSE 100, gaining 6.5%.
The business said that rises in the cost of living have hit the 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.
Hargreaves Lansdown analyst Matt Britzman said: “We’re continuing to see consumer trends revert to more typical patterns following a boost given during lockdowns, now we’re able to get out and about that’s having a negative impact on demand for traditional tobacco products.”
Imperial Brands said: “Volume decline rates have deteriorated further recently, reflecting some increased inflationary pressure on consumer spending.”
Mr Bomhard said that the company has also stabilised its traditional cigarette and tobacco business – combustibles as it calls it.
It increased market share in five key countries – the US, UK, Spain, Germany and Australia – 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, what it calls “next generation”.
“In next generation products, consumers have given positive feedback on our recent trials, validating our new insights-driven approach,” Mr Bomhard said.
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.
“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,” the chief executive said.
“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.”