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Imperial Brands posts profit and eyes 2022 as year of change

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·Reporter
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Imperial Brands posts profit and eyes 2022 as year of change
The company saw losses narrow in its e-cigarettes business. Photo: Nick Ansell/PA via Getty

Imperial Brands (IMB.L) hailed a strong full-year performance on Tuesday, posting better-than expected profits thanks to increased cigarette prices.

The FTSE 100 (^FTSE) tobacco group, which makes Gauloises and West cigarettes, also saw losses narrow in its e-cigarettes business.

It reported a turnover of £32.8bn ($44.2bn) for the 12 months to the end of September, compared to £32.6bn the year before, while pre-tax profit came in at £3.24bn.

Profits rose from £2.17bn the year before mainly due to gains on the disposal of its Premium Cigar division.

Adjusted earnings per share came in at 247.1p, above the 244.5p analysts had forecast.

Imperial added that next year it would further reorganise the firm to strengthen “the foundations” of its current five-year plan. This includes further internal business reorganisation and significant investments in marketing and sales, mainly taking place in the second half of the year.

Read more: Vodafone rises to top of FTSE as earnings boosted by roaming charges

The higher investments will result in adjusted operating profit growing slightly slower than net revenue growth in fiscal 2022, the company said. Net revenue growth is anticipated to be similar to that in 2021.

Imperial declared a dividend of 139.08p a share for the financial year, up from 137.7p a year earlier. However, shares were more than 2% lower on the day.

Imperial stock fell on Tuesday on the back of the news. Chart: Yahoo Finance
Imperial stock fell on Tuesday on the back of the news. Chart: Yahoo Finance

“This has been a year of important progress and significant change, as we begin to deliver on the new, focused strategy we announced in January 2021,” Stefan Bomhard, chief executive, 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 also pointed to a more than 50% reduction in losses in its next generation products (NGP) business, which includes e-cigarettes, tobacco-heating products and oral nicotine, helped by exits from markets such as Japan and Russia.

Read more: European markets subdued as UK unemployment rate falls to 4.3%

Bomhard, the former boss of car dealer Inchcape (INCH.L), has been aiming to turn the company around after years of sluggish growth as consumer habits move away from cigarettes.

Mark Crouch, analyst at multi-asset investment platform eToro, said: “Imperial Brands is at the start of a five-year transformation plan so its full-year results today were also going to be mixed and about marginal gains.

“Imperial Brands is trying to dramatically alter its product set long-term, but as yet the next generation products it talks about account for a small proportion of revenue.

“It’s early days in that transformation, but shareholders will soon want to see progress, particularly when you consider the firm’s shares are down nearly 54% over the past five years.”

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