Big Tobacco CEO quits as five-year plan comes to a close

The CEO of Golden Virginia maker Imperial Brands has stepped down as his five-year plan for the company draws to a close.

Stefan Bomhard – who joined the Big Tobacco player in 2020 from foodservice giant Compass Group – will be succeeded as CEO by Lukas Paravicini, currently chief financial officer.

During Bomhard’s tenure at the world’s fourth-largest cigarette company, Imperial had “strengthened its tobacco operations, built a refreshed platform for next-generation products, and delivered significant returns to shareholders” the company said.

“With the team now preparing to implement our 2030 strategy, it feels like an appropriate time to hand on the baton,” Bomhard said.

Shares fell by 7% in the wake of the announcement, a mark, said AJ Bell investment director Russ Mould, of Bomhard’s “popularity with investors”.

“He took over as chief executive 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,” Mould said.

Paravicini had “a big job on his hands, especially as regulatory pressure continues to hem in the company” Mould added.

Paravicini has been CFO since 2021, and had previously served as chief operating officer and chief financial officer for Fonterra, and had a 22-year career at Nestlé.

“As we deliver on the next stage of our strategy, Imperial Brands will continue to play its distinctive role as the strong challenger business in our industry,” Paravicini said. “By getting even closer to our consumers, staying focused and investing to be more agile, we will deliver sustainable growth in tobacco and profitable scale in next generation products.”

Murray McGowan, currently Imperial Brands’ chief strategy and development officer, will succeed Paravicini in the CFO role.

Imperial Brands has been responding to the gradual decline in cigarette volumes through increased prices, market share gains and overall cost efficiencies, as well as chasing improved returns from its ‘Next Generation Products’ like vape brand Blu and heated tobacco brand Pulze. It has also moved into oral nicotine products through brands Skruf and Zone. The company sold its cigar brands in 2021 for $1.3bn.

The ambition in its plan to 2030 is for the company to generate high single-digit percentage earnings per share growth on an annual basis and free cash flow of £2bn to £3bn a year, and to increase its dividend and buy back shares each year.

During Bomhard’s five-year tenure, Imperial Brands has returned £9.8bn to its shareholders.

“That is two-thirds of the company’s £14.4bn 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,” Mould said.