Imperial Brands' Focused Strategy and Improved Capital Allocation Beginning To Reap Rewards

Stefan Bomhard unveiled a five-year strategic plan in 2021 that will concentrate Imperial's investments geographically and on emerging categories that are likely to become the largest profit pools in the future. The plan essentially recognizes Imperial's place in the marketplace—it is a fast follower, rather than a leader, in most markets. This makes Imperial a different investment proposition than its Big Tobacco peers, particularly Philip Morris International, which is investing in growth and moving away from the secular decline of the cigarette industry. Imperial, on the other hand, is likely to be the company more exposed to cigarettes in future, and although it should trade at a discount to its peer group, Imperial should remain a highly profitable and cash-generative business.