Imperial Brands PLC - Trading Statement
IMPERIAL BRANDS PLC
Legal Entity Identifier (LEI) No. 549300DFVPOB67JL3A42
"Imperial has continued to show resilience in adapting to the challenges posed by the COVID-19 pandemic and our priority remains the health, safety and well-being of our people across our operations.
"In my first three months as CEO I have focused on reviewing our strategy, engaging with employees, and visiting as many of our key markets as possible. I have been struck by the energy and passion of my colleagues, which increases my confidence in our ability to deliver a stronger performance in the years ahead. I expect to be able to share some initial observations about the business when we publish our preliminary results on 17 November, at which time we will also announce the date of a capital markets event to provide a strategic update in the first quarter of calendar 2021."
As well as leading the Group's strategic review, Stefan has strengthened his Executive Committee with some external hires to bring in fresh perspectives and ensure we have the right skills to take the business forward. Complementing existing Divisional Directors
As previously announced, the Company is currently searching for a new Chief Financial Officer, following
Full Year Trading Update
The tobacco business has continued to perform well despite an uncertain and disrupted trading environment. We have experienced some COVID-related changes in consumer behaviour with increased overall demand against our expectations, as consumers appear to have allocated more of their spend to tobacco, as well as some demand shifts between different markets and channels. This has resulted in better than expected volumes, driven by improved volume trends in several key European markets and in the US. These positive trends have helped to offset relatively weaker market volumes in the duty free channel and in some traditional summer tourist destinations, where reduced travel has impacted demand. Overall, we expect tobacco net revenue to increase by around 1% at constant currency.
The focus in NGP has been on improving performance, returns and capabilities. As previously announced, we have significantly reduced investment while maintaining a range of options for future growth. Trading has been disappointing, albeit in line with our revised expectations with the level of underlying losses reduced in the second half as we curtailed expenditure. NGP net revenue is expected to be around 30% lower than last year at constant currencies.
Group net revenue performance is slightly ahead of the guidance provided at our half year results, and is expected to be broadly flat on last year at constant currencies. However, as highlighted in our half year results, we have incurred some additional manufacturing costs caused by the COVID-related restrictions. In addition, given the ongoing COVID-related uncertainties, we have increased our provisions, mainly in respect of stock and debtor positions. As a result, we expect constant currency earnings per share will be down by around 6%, in line with current market expectations.
At the year-end closing rates, foreign exchange translation was a c. 1% headwind to full year earnings per share.
We expect underlying cash conversion will be ahead of our original expectations driven by a continued focus on all aspects of cash management, with some additional upside at Logista due to some COVID-related changes in the timing of excise duty payments. Cash generation has also benefited from lower capex and restructuring charges as a result of some COVID-related delays in certain cost optimisation projects, which we now expect to complete in FY21. The divestment of the Premium Cigars business is on track to complete on 29 October with the second non-refundable down payment of
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Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is or may be a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied in any forward-looking statement. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement. As a result, you are cautioned not to place any reliance on such forward-looking statements. The forward-looking statements reflect knowledge and information available at the date of this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the Company for current or future financial years will necessarily match or exceed the historical or published earnings per share of the Company. This announcement has been prepared for, and only for the members of the Company, as a body, and no other persons. The Company, its Directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this announcement is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.
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