Has Imperial Brands PLC (LSE:IMB), the tobacco producer, again upped prices to help deal with a drop in volumes?
Experts are expecting a 5.6% fall in volumes in 2023 to 209mln, with an additional 7bln cigarette stick equivalents predicted to be lost by the group’s withdrawal from Russia.
“The FTSE 100 firm’s array of key brands, which includes JPS, Davidoff and Gauloises, still confers some degree of pricing power, despite regulators’ restrictions on packaging and advertising,” said analysts at AJ Bell.
In 2022, the tobacco firm was able to stem a 4.8% drop in volumes by increasing prices by 6%.
Another focal point for investors will be the net debt of the company, which has fallen significantly from 2017’s £47bln peak after it spun off its premium cigar business for €1.1bln.
The group’s net debt was at £39bln at the end of the 2022 financial year and shareholders will hope that any further reduction will boost chances of increased dividends.
After cutting dividends by a third in 2020, the group has begun upping its shareholder returns with two consecutive hikes and the launch of a £1bln buyback scheme.
“Analysts expect an increase in the full-year dividend for 2023 as well, so they will be looking for an advance in the interim payment, too,” added the analysts at the investment bank.
The group confirmed in its first-quarter trading update that profits in the first half would stay relatively flat, but that whole-year earnings and sales for both next-generation products and stick equivalents would grow.
Shares in Imperial Brands are currently down close to 10% in the year-to-date, having opened on Monday at 1,899p.