- Full-year revenue flat at £32.5bn, with strong pricing offsetting volume declines
- Operating profit up 26.8% to £3.4bn
- EPS up 52.1% reflecting impact of buybacks
- Dividend up 4% to 146.82p per share
- Low single-digit revenue growth expected this year. Mid-single digit growth for operating profit
Derren Nathan, head of equity research at Hargreaves Lansdown:
“If smoking wasn’t banned at the workplace, Imperial’s management could be forgiven for handing out the cigars in today’s Board meeting. Excluding the now exited Russian operations, tobacco volumes were down by 7.1%. Imperial see this as a structural decline and its hard to argue with that in the combustible space. But strong pricing has helped to keep revenues steady. The operating margin uplift to 26.8% was somewhat flattered by charges taken last year due to the closure in Russia but the 11% price hikes and strong cost control also saw underlying operating grow by 3.8%. Whilst some smokers may be quitting nicotine altogether, one area of the market certainly not in decline is Next Generation Products (NGP) like vapes, heated and oral tobacco, where Imperial grew revenue by 26.4% with an especially impressive showing in Europe. For now though it’s still a small part of the picture. The five year plan seems very much on track and Imperial are expecting another year of modest growth. As long as its not derailed by a downward lurch in the economy, that should allow free cash flows to remain sufficient to fund investment in the NGP portfolio, generous returns to shareholders and opportunistic M&A activity.”
