Tobacco giant Imperial Brands cut its dividend by a third to preserve cash and reported lower first-half profit, owing to a fall in vaping sales and tobacco volumes. The dividend was cut by 33.3% to 41.7p a share as the company sought to accelerate debt repayment, and strengthen its balance sheet. For the six months ended 31 March, pre-tax profit fell to £758m from £1.02bn on-year as revenue slipped 2% to £3.6bn, in line with revised expectations, the company said. The decline was driven by a 56% slump in sales of next generation products (NGP), which included vaping, reflecting destocking of the supply chain and the company's decision to reduce NGP investment to improve returns against a declining vapour category. Tobacco volumes decreased by 3.0%, reflecting tobacco market trends in Western Europe, and some benefit from a short period of increased demand caused by the Covid-19 related lockdowns and strong private label sales. Looking ahead, the company estimated Covid-19 related factors would have a low single digit impact on earnings per share, in addition to current market expectations for a 2% decline in earnings per share at constant currency, reflecting the full year guidance given in February. 'In addition, our full year results will now also reflect the impact of the intellectual property asset impairment of £19m (c. 0.6% impact to EPS), which has been recognised in the first half but was not included in our previous guidance in February. We now also expect the premium cigar disposal will complete in July resulting in earnings dilution of c. 0.3% in the current year,' it added.
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