By Shashwat Awasthi and Emma Rumney
(Reuters) -Imperial Brands said CEO Stefan Bomhard will retire after five years in the job, sending the British cigarette maker’s shares down more than 7% as investors lamented the unexpected loss of a leader credited with turning its performance around.
Under Bomhard, the maker of Winston, Davidoff and Gauloises cigarettes has enjoyed a rebound in sales and returns as it focused on core markets and its tobacco business, while also looking to expand in smoking alternatives.
Finance chief Lukas Paravicini will take over as CEO on October 1 and will be tasked with driving that growth strategy forward as the company targets up to 5% annual profit growth until 2030.
Shares in the company, which also owns e-cigarette brand blu, nicotine pouch brand Zone and heated tobacco device Pulze, were trading 7.9% lower at 0930 GMT on Wednesday, having gained nearly 90% during Bomhard’s tenure.
Prior to Bomhard’s arrival Imperial had lost market share in its core tobacco business and failed to gain any real traction with new products like vapes, resulting in years of missed sales targets and a 2020 write-down.
Bomhard restored that market share, sales growth and healthy investor returns by retreating to focus on traditional tobacco in Imperial’s key markets.
He also fine-tuned the company’s strategy on smoking alternatives – a portfolio which delivered double-digit growth in the first half of this year.
“There is no doubting the disappointment in Stefan Bomhard announcing his retirement… after an exceptional five-year run,” Panmure Liberum analyst Rae Maile said in a note.
While the departure of such a well-regarded CEO after a strong run always causes investor concern, CFO Paravicini’s appointment as Bomhard’s successor should give shareholders confidence, Barclays analyst Gaurav Jain said.
CONTINUITY
Paravicini told investors on an analysts’ call he was committed to Imperial’s five-year strategy set out in March and a capital allocation framework based around healthy returns for shareholders.
Under that strategy, Paravicini is tasked with stepping up growth in smoking alternatives, where Imperial lags competitors, and compounding progress on tobacco in difficult markets like Germany, where Imperial has struggled to regain lost share amid stiff competition.
Bomhard portrayed his departure as “a very personal decision” related to freeing up personal time for himself and his family after 11 years leading large UK companies.
He was previously CEO of car distributor Inchcape and held senior roles at Unilever and Bacardi.
Bomhard will remain on the board until December 31 and will be available until May 2026 to support the transition. Imperial Brands’ Chief Strategy and Development Officer Murray McGowan will replace Paravicini as CFO.
The company also reported a 1.8% rise in first-half adjusted operating profit at constant currency, just shy of analysts’ estimates of 2%, and reaffirmed its annual forecast.
(Reporting by Shashwat Awasthi and Emma Rumney; Editing by Sumana Nandy, Elaine Hardcastle and Jan Harvey)
