MARKET REPORT: Vaping boom lights up Imperial Brands stock

Imperial Brands shares hit their highest level in more than five years as the tobacco giant behind companies like Golden Virginia and Lambert & Butler cashed in on growing demand for vaporizers.

The FTSE 100 group saw sales of so-called next generation products (NGPs), including vapes, heated tobacco products and oral nicotine pouches, rise 26 per cent in the 12 months to September.

By contrast, tobacco volumes decreased by 4 percent, although this was offset by price increases.

Overall sales remained broadly flat, with a fall of just 0.2 per cent to £32.4 billion, and profits rising 4.5 per cent to £3.55 billion. It was better than expected in the City.

A 4.5 percent increase in the dividend to 153.42 per share also lifted spirits. The shares rose 3.1 per cent, or 74 pence, to 2,475 pence, the highest level since April 2019.

The company, known around town as Imps, has aggressively expanded into new areas such as vaporizers with the Blu e-cigarette brand among its next-generation products.

But it still makes most of its sales from traditional cigarettes, including its John Player Special, Davidoff, Gauloises and Winston brands, and the NGP business posted annual losses of £79m. Imps also owns Rizla rolling papers and Backwoods cigars.

Derren Nathan, head of equity research at brokerage Hargreaves Lansdown, said next-generation products are “starting to become more significant” for Imps, but added that “for now it remains a loss-making activity”.

The FTSE 100 lost 0.13 per cent, or 10.3 points, to 8,099.02 and the FTSE 250 rose 0.16 per cent, or 32.21 points, to 20,427.62, as concerns over a rally in the war between Russia and Ukraine shook global markets.

In Europe, the Frankfurt stock market fell 0.7 percent, the Paris stock market also fell 0.7 percent and the Milan stock market fell 1.3 percent.

Benchmark indices also fell in New York, with the Dow Jones Industrial Average losing 0.3 percent.

Back in London, British Airways owner IAG fell 2 percent, or 4.9 pence, to 239.7 pence after another computer crash forced it to cancel flights.

Telecoms giant BT Group rose 3.5 per cent, or 5.05 pence, to 149.8 pence after India’s Bharti Global became its largest shareholder by completing the acquisition of a 24. 5 percent of telecommunications magnate Patrick Drahi’s Altice.

Technical products and services provider Diploma fell the most. The company, which distributes everything from wires and wiring to seals and surgical medical devices, saw its annual revenue rise 14 per cent to £1.36 billion and profits rise 20 per cent to £285 sterling.

But this fell short of the City’s expectations and the shares fell 8 per cent, or 362p, to 4,174p.

Big Yellow Group was also in decline, falling 4.9 per cent, or 56 pence, to 1,098 pence, even after the self-storage firm posted a 3 per cent rise in half-year revenue to £103 million. pounds and a 22 per cent rise in profits to £145.8 million.

Analysts at Peel Hunt didn’t help, reducing their price target on the stock to 1,250p from 1,275p.

On a good day for traditional engineers, Bodycote rose 8 per cent, or 46p, to 621p, after the metal treatment specialist reported a 1 per cent rise in revenue to £643m in the first ten months of the year.