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Imperial Brands up as full-year revenues rise, adjusted profit beats after Palmer & Harvey write-off

The FTSE 100-listed tobacco firm reported revenue of £30.5bn for the 12 months to September 30, up from £30.2bn a year earlier
West cigarette
But the maker of Gauloises and Winston cigarettes saw its basic earnings per share fall by 2.7% to 143.6p

Imperial Brands PLC (LON:IMB) shares rose on Tuesday after the tobacco group saw its full-year revenue rise by around 1%, helped by strong growth from next-generation products (NGP) for smokers, while adjusted profit beat forecasts after a write-off related to the bankruptcy of wholesale distributor Palmer & Harvey (P&H).

The FTSE 100-listed tobacco firm reported revenue of £30.5bn for the 12 months to September 30, up from £30.2bn a year earlier.

READ: Imperial Brands on track to deliver in-line full-year results, helped by sales of alternative smoking products

But the maker of Gauloises and Winston cigarettes saw its basic earnings per share (EPS) fall by 2.7% to 143.6p impacted by the P&H business write-off and currency factors, but adjusted EPS was up 5% to 272.2p.

The group saw its net revenue for both tobacco and NGP increase by around 1%, although reported volumes fell by 3.6% still outperforming industry volumes across its regions.

The company raised its full-year dividend by 10% to 187.8p, up from 170.7p a year earlier.

Alison Cooper, Imperial Brands’ chief executive, said the success of the international rollout of its myblu NGP product has put the group “in a strong position to further invest and accelerate sales growth in FY19.”

She added: “Following our additional brand investment in tobacco over the past two years, we have increased Growth Brand volume, share and revenue in our priority markets.”

The CEO concluded: “We have the strategy, assets and capabilities to realise the significant opportunities presented by a changing environment and to generate growing returns for our shareholders."

Reassuring results

In a note to clients, analysts at Liberum Capital commented: “Imperial Brands’ adjusted EPS came in at 272.2p, beating consensus estimates by 1.1%. All divisions beat adjusted EBITA expectations excluding Return Markets South.”

They added: “The group expects to deliver constant currency revenue growth at, or above, the upper end of the 1-4% range for FY19. The medium-term guidance for constant currency EPS growth of 4-8% remains in place.”

The analysts concluded: “Today’s beat should reassure investors. Imperial is our top pick in tobacco.”

Liberum reiterated a ‘buy’ rating and 3,100p price target on Imperial Brands shares which in early trading were 1.5% higher at 2,683.50p.

 -- Adds analyst comment, share price --

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