Imperial Brands PLC (LSE:IMB), the tobacco giant, is still losing market share albeit not as quickly as it had been.
The FTSE 100 giant made market share gains in the US, UK and Spain but this did not quite offset declines in Germany and Australia in the year to the end of September. Its aggregate market share in its priority marks was down two basis points (bp) year-on -year – 100 bps equals a full percentage point – having declined 17 bps in the same period of last year.
Organic (i.e. stripping out acquisitions and divestments) tobacco volumes were down 2.9%, in line with the market decline, and better than the 3.3% fall the market had been expecting.
Full-year net revenue fell 1.9% to £7.74bn (excluding the disposed of premium cigar division) from £8bn the year before; this was marginally better than the £7.7bn analysts had been expecting and on a constant currency basis revenue would have been up 1.4% on the previous year.
Organic adjusted operating profit rose 4.8% on a constant currency basis to £3.53bn, ahead of the £3.3bn analysts had forecast.
Adjusted underlying earnings (EBITDA) was virtually unchanged from the previous year at £3.84bn. Reported profit before tax jumped to £3.24bn from £2.17bn the previous year.
The dividend per share was nudged up to 139.08p from 137.7p, slightly less than the 140p per share the market was expecting.
It expects to deliver net revenue growth in the current fiscal year, on a constant currency basis, of a similar magnitude to the year just ended, while adjusted operating profit is expected to grow slightly slower than net revenue, reflecting increased investment.
Chief executive Stefan Bomhard said it had been a year of important progress and significant change for the company, while the current year will see a step up in the group’s investment in growth initiatives in what it calls its priority combustible markets.
Bomhard said performance in the current fiscal year is likely to be weighted to the second half. While there is a risk of inflationary pressures, Bomhard believes the group is well placed to manage them.
“Through our focused, consumer-led next-generation products strategy, we are committed to making a meaningful contribution to harm reduction over time by offering adult smokers potentially reduced-risk products. In line with our plans, we launched market trials for our heated tobacco proposition, Pulze and iD sticks in the Czech Republic and Greece, as well as a trial of an improved consumer marketing proposition for our US vapour product, blu. We will track the consumer data over the coming months to inform our next steps,” Bomhard said.
"Our five-year plan to transform Imperial is divided into two distinct periods. The year ahead will complete the two-year strengthening phase, with further investment in our five priority markets and NGP pilots, the embedding of new ways of working and cost-saving initiatives. This period builds the foundations for the subsequent three-year phase, which focuses on the acceleration of returns and sustainable growth in shareholder value," he added.