Imperial Brands maintains guidance as revenue, profits decline

(Sharecast News) - Imperial Brands reported a decline in headline revenue on Wednesday, but posted improved earnings per share and maintained strong cash generation in its half-year results, supported by what it called resilient tobacco pricing and continued growth in next-generation products (NGPs). For the six months ended 31 March, group revenue fell 3.1% to £14.6bn, while adjusted tobacco and NGP net revenue rose 0.7% to £3.66bn, or 3.2% at constant currency.

Adjusted operating profit declined 1% to £1.65bn, although it grew 1.9% on a constant currency basis.

Reported operating profit fell 2.5% to £1.46bn.

Earnings per share increased, with adjusted EPS up 3.1% to 123.9p - up 6% in constant currency - and reported EPS rising 0.7% to 96.7p.

Imperial said share count reductions contributed to those gains.

The interim dividend rose sharply by 78.5% to 80.16p per share, while a £1.25bn share buyback programme was underway.

Imperial highlighted a six basis point aggregate market share gain in its five priority markets, and said strong pricing had more than offset ongoing volume declines in tobacco.

NGP revenue grew 15.4%, with gains across all categories.

Free cash flow over 12 months totalled £2.4bn, with a 99% conversion rate.

Imperial said it remained on track to meet full-year guidance.

"We have delivered another six months of broad-based constant currency growth across all regions, demonstrating the strength of our distinctive challenger approach and the benefit of long-term investments in our consumer capabilities, sales execution and performance culture," said chief executive officer Stefan Bomhard.

"In tobacco, we grew aggregate market share in our five priority markets by six basis points - ahead of our strategic objective to hold share.

"At the same time, we delivered a strong price mix of 5.9% across our overall combustible footprint."

Bomhard said that in next-generation products, the company increased market share and net revenue in all three categories to support overall NGP net revenue growth of 15.4%, while adjusted operating losses reduced by 14%.

"Our modern oral portfolio has grown strongly across all markets, including further share gains from the successful roll-out of Zone in the USA.

"Our operational delivery is driving consistent financial performance and strong cash flows, which underpin both investment in growth initiatives and enhanced capital returns to shareholders.

"This year, shareholders will benefit from an accelerated cash payment as we rephase the dividend to four equal instalments and from the ongoing £1.25bn share buyback programme."

Despite the uncertain global economic environment, Stefan Bomhard said Imperian was on track to deliver full-year results in line with guidance, supported by tobacco pricing already taken in the first half and continued momentum in NGP.

"Looking beyond the current fiscal year, we remain committed to the plans and medium-term guidance we provided in our 2030 strategy in March.

"These plans set out the focused choices we will make to further strengthen our combustible and NGP businesses and generate another five years of sustainable growth and long-term shareholder value through a progressive dividend and an evergreen share buyback."

At 0833 BST, shares in Imperial Brands were down 8.26% at 2,651.37p.

Reporting by Josh White for Sharecast.com.