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Russian withdrawal hits Imperial Brands but annual profit stays near £3 billion

Imperial has reopened its Kyiv factory that makes the Davidoff cigarette brand  (Getty Images)
Imperial has reopened its Kyiv factory that makes the Davidoff cigarette brand (Getty Images)

Imperial Brands, the maker of John Player Special and Gauloises cigarettes, has taken a hit from its withdrawal from Russia, reporting drop of almost 15% in annual profit, which still came in at almost £2.7 billion.

It claims to be the only major tobacco company to have fully withdrawn from the country after Moscow’s invasion of Ukraine, where it has reopened its Kyiv factory, which makes Davidoff cigarettes and employs 600 people.

Imperial is biggest single dividend payer on the FTSE 100 and upped its regular payout to investors by 1.5% to over 141p per share alongside an ongoing £1 billion share buyback.

The Bristol-based firm said it was gaining market share in the US, Spain and the UK. helped by  a regionalised “local jewel” brand strategy, an approach that contrasts with its rivals. It has also pulled out of the Japanese market.

Stefan Bomhard, chief executive, said: “Our competitors are very focused on global brands. We’ve been driving a very different strategy, we’re focused on local brands”.

In the capital, that means Embassy cigarettes,, helping Imperial extend its traditional strength in the north of England. Bomhard added: “In London and further south we have seen some nice market share gains. We have focused on addressing our underperformance in the south.”

Overall tobacco volumes dropped almost 5%, or just over 1% excluding Russia.

Richard Hunter,. head of markets at Interactive Investor, said: “Ethical considerations aside, Imperial Brands continues to tick any number of investment boxes and shareholders have been handsomely rewarded as a result.

“The nature of the industry may not be to everyone’s taste, but from an investment perspective the company’s performance is hard to dispute, with the market consensus of the shares as a strong buy underlining the potential for further rewards.”

Imperial’s shares rose 17p to 2054p, a gain of 0.8%.