- Stefan Bomhard to step down as his five-year turnaround plan runs its course
- Chief financial officer Lukas Paravicini to oversee second five-year plan
- Transition seems smooth but share price shows Bomhard’s popularity with investors
- Shares also weighed down by unhelpful currency movements
- Bomhard is the seventh CEO change announced by a FTSE 100 member this year
- Paravicini’s move represents the seventeenth planned change in CFO announced this year
“Stefan Bomhard took over as chief executive of Imperial Brands just as the company cut its dividend by a third, but the degree to which he has subsequently won over sceptical investors with his five-year turnaround plan is shown by how the share price is sliding in response to the news that he is to retire after five years in the job this October,” says AJ Bell investment director Russ Mould.
“His successor, Imperial’s current chief financial officer, Lukas Paravicini, therefore has a big job on his hands, especially as regulatory pressure continues to hem in the company. But he and Mr Bomhard have already outlined a second five-year plan designed to keep cash flow, and therefore dividends and buybacks, flowing.
Source: Company accounts, Marketscreener, analysts’ consensus forecasts. Financial year to September.
“Imperial Brands continues to overcome a gradual decline in cigarette volumes by means of higher prices, market share gains in its five target markets and cost efficiencies, as well as improved returns from its Next Generation Products (NGPs). Key tobacco brands include JPS, Davidoff, Gauloises and Winston, while Imperial Brands’ leading NGPs are blu for vapour and Pulze for heated tobacco, while skruf and zone are its leading oral nicotine products. The company sold its cigar brands back in 2021 for $1.3 billion.
Source: Company accounts. AAACE = Africa Asia Australia and Central Europe. Cigars sold in 2021. Central Europe moved from Europe to AAACE in 2022. Financial year to September.
“The turnaround plan orchestrated by Mr Bomhard and Mr Paravicini, who joined the company a year later, took its time to get going, but investors have warmed to it judging by how the shares hit a seven-year high earlier this month.
“This provides a solid platform upon which Mr Paravicini can look to build, especially as the handover looks well managed, with chief strategy officer Murray McGowan stepping up to take the post of chief financial officer.
“In addition, Imperial Brands laid out the next five-year leg of its strategy at a well-received analysts’ meeting in March. The goal here is to generate high single digit percentage earnings per share growth on an annual basis and free cash flow of £2 billion to £3 billion a year, with the result that the FTSE 100 index member plans to increase its dividend and buy back shares each year.
“During Mr Bomhard’s five-year tenure, Imperial Brands will have returned £9.8 billion to its shareholders. That is two-thirds of the company’s £14.4 billion stock market capitalisation at the time he took over and, in this context, it is no wonder that income-seeking investors seem sorry to see him go.
Source: Company accounts, Marketscreener, management guidance for 2025E, consensus analysts' forecasts
“Mr Bomhard is currently the forty-eighth longest-serving CEO in the FTSE 100, and he will have served 5.3 years by the time he steps down, a fraction under the 5.8-year average tenure of the current crop of bosses in the UK’s premier stock market index.
“He is just the seventh FTSE 100 boss to announce his departure this year, to make 2025 a relatively quiet one so far for changes at the top, given how the post-2000 average is some 12 to 13 changes in leader a year. That said, it is only May.
Source: Company accounts. *As announced to date.
“Six of the announced changes are due to come into force this year, and one next year.
Source: Company accounts
“Meanwhile, Imperial Brands is now the seventeenth FTSE 100 member to announce a change in CFO, as Mr Paravicini steps up to the top job after 4.4 years in the post, a fraction ahead of the average tenure across the FTSE 100 overall. Two of those changes will become effective in 2026.
Source: Company accounts
“This means 2025 looks like being another busy year for CFO changes, as the post-2000 average is 15 to 16 and we are there already with seven months to go, and that comes after two years of above-average turnover.”
Source: Company accounts. *As announced to date.
