Shares in Imperial Brands hit their highest level for more than five years as the tobacco giant behind the likes of Golden Virginia and Lambert & Butler cashed in on booming demand for vapes.
The FTSE 100 group saw sales of so-called next generation products (NGPs) – including vapes, heated tobacco products and oral nicotine pouches – jump 26 per cent in the 12 months to September.
By contrast, tobacco volumes were down 4 per cent, though this was offset by price hikes.
Overall sales were broadly flat, down just 0.2 per cent to £32.4billion, and the 4.5 per cent rise in profits to £3.55billion was better-than-expected in the City.
Vape boom: Imperial Brands saw sales of next generation products – including vapes, heated tobacco products and oral nicotine pouches – jump 26% in the 12 months to September
A 4.5 per cent increase in the dividend to 153.42p a share also lifted the mood. Shares rose 3.1 per cent, or 74p, to 2475p, the highest level since April 2019.
The company, known in the City as Imps, has expanded aggressively into new areas such as vapes with e-cigarette brand Blu among its next generation products.
But it still makes the bulk of its sales from traditional cigarettes, including its John Player Special, Davidoff, Gauloises and Winston brands, and the NGP business clocked up annual losses of £79million. Imps also owns Rizla rolling paper and Backwoods cigars.
Derren Nathan, head of equity research at broker Hargreaves Lansdown, said next generation products are ‘starting to become more meaningful’ for Imps but added that ‘for now it’s still a loss-making activity’.
The FTSE 100 lost 0.13 per cent, or 10.3 points, to 8099.02 and the FTSE 250 increased 0.16 per cent, or 32.21 points, to 20,427.62 as concerns about an escalation in the war between Russia and Ukraine rattled global markets.
In Europe, the stock market in Frankfurt fell 0.7 per cent, Paris also dipped 0.7 per cent and Milan slid 1.3 per cent.
Benchmarks were also lower in New York with the Dow Jones Industrial Average off 0.3 per cent.
Back in London, British Airways owner IAG fell 2 per cent, or 4.9p, to 239.7p after another IT meltdown forced it to cancel flights.
Telecoms giant BT Group rose 3.5 per cent, or 5.05p, to 149.8p after India’s Bharti Global became its largest shareholder with the completion of its acquisition of a 24.5 per cent stake from telecoms tycoon Patrick Drahi’s Altice.
Technical products and services provider Diploma was the biggest blue-chip faller. The company, which distributes everything from wire and cabling to seals and medical devices for surgeries, posted a 14 per cent rise in annual revenues to £1.36billion and a 20 per cent rise in profits to £285.
But this missed City expectations and shares slumped 8 per cent, or 362p, to 4174p.
Big Yellow Group was also on the slide, down 4.9 per cent, or 56p, to 1098p, even after the self-storage firm posted a 3 per cent rise in half-year revenues to £103million and a 22 per cent jump in profits to £145.8million.
Peel Hunt analysts did not help, cutting their target price on the stock to 1250p from 1275p.
On a good day for old-fashioned engineers, Bodycote rose 8 per cent, or 46p, to 621p after the metal treatment specialist reported a 1 per cent rise in revenues to £643million in the first ten months of the year.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you