Imperial Brands PLC (LON:IMB) has said it is on track to meet earnings expectations for the full year after the cigarette maker’s second half volumes outperformed, and it revealed it is working with other stakeholders on a rescue deal for UK tobacco wholesaler, Palmer & Harvey.
In a pre-close season trading update, the FTSE 100-listed company - which makes West and Davidoff cigarettes – said: “Our increased investment is delivering a stronger second half performance with market share gains in most of our priority markets and continued outperformance of our Growth Brands.”
READ: Imperial Brands says “on track" to meet first-half earnings expectations thanks to currency benefits
The group added: “We continue to invest behind our strategy to drive sustainable growth in a particularly challenging industry environment. The impact of this investment on earnings is mitigated by our cost programmes, pension scheme restructuring and ongoing efficiencies.”
The group said it expects to deliver “strong growth in revenues and earnings at actual currency, with constant currency performance impacted by the significant additional investments in the year.”
It added that its cash generation remains strong.
Imperial Brands also said it is gearing up for new launches in Next Generation Products and is focused on further building the blu brand.
The group confirmed that, further to media speculation, it has been working, together with other stakeholders, to “create a sustainable future” Palmer & Harvey, with whom it has a close trading relationship.
Shares top FTSE 100 fallers list
In afternoon trading, shares in Imperial Brands topped the FTSE 100 fallers list, down 4.4%, or 144.5p at 3,160.5p.
Charlie Huggins, manager of the HL Select UK Income Shares Fund, which holds shares in Imperial Brands, commented “While Imperial’s strategy remains eminently sensible, the external environment remains very challenging, with regulatory headwinds intensifying and the shift to Next Generation Products accelerating.
“These uncertainties have seen the shares weaken over recent months, meaning they now trade on a P/E of just 12x and offer a yield of over 5%, growing at 10% per annum.
“While we acknowledge the various uncertainties, the current valuation combined with the strength of Imperial’s cash flows, gives us confidence in the group’s ability to deliver an attractive total return to investors over the medium to longer term.”
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