Imperial Brands – Revenue, Profits, And Tobacco Volumes In Line With Guidance

Published on

Imperial Brands PLC (LON:IMB) is on track to deliver full-year net revenue growth of 0-1%, adjusting for currency fluctuations. Meanwhile, underlying operating profit is expected to grow around 1%.

Overall market share grew in the five core markets. Gains in the US, UK and Australia offset losses in Germany and Spain. The group was able to maintain “strong pricing discipline” over the period, with tobacco volumes trending in line with expectations.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q4 2021 hedge fund letters, conferences and more

Next Generation Product (NGP) trials continue, with consumers reacting positively to the Pulze heated tobacco system in Greece and the Czech Republic, and blu vapour products in the US. First-half NGP revenue is expected to be slightly ahead of the previous period.

We’re expecting to hear more details in the half-year results announced on 17 May 2022.

Imperial Brands's Transition

Matt Britzman, Equity Analyst at Hargreaves Lansdown:

“As we enter the second year of Imperial Brands’ 5-year strategy, focus remains on improving market share in core markets – the US, UK, Spain, Germany and Australia – which account for around 70% of profits. Trends seen last year seem to be continuing, growth in US, UK and Spain is progressing, but Germany and Australia remain tough cookies to crack.

Key for any tobacco company in today’s world is how they’re going to transition away from the increasingly unpopular classic tobacco products and build out an offering of next generation products. Imperial Brands pretty much scrapped their plans and started from scratch a year or so ago when the new strategy announced. Focussing now on heated tobacco products in Europe and its blu vape brand in the US. We’re still yet to hear any real details on how these are progressing, except the fact losses in the division are expected to reign in slightly. With full-year group sales expected to grow 0-1%, there needs to be some movement on next generation products soon to start giving markets something to get excited about again. In the meantime, though, a 9% dividend isn’t bad to be sitting on but it’d be nice if the investment case was based on more than just a lofty yield.

Negotiations for the transfer of the group’s Russian assets are ongoing, with operations in the region being suspended at the start of March. Operationally speaking, the region (including Ukraine) represents about 0.5% of operating profit so wont impact trading performance in a major way.”

About Hargreaves Lansdown

Almost 1.7 million clients trust us with £141.2 billion (as at 31 December 2021), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.