The multinational tobacco company, Imperial Brands stated they are trading in line with its five-year strategy launched in 2021 on Wednesday.
The news of increased market share and performance in line with the company’s five-year strategy encouraged investors, and the group shares lifted nearly 3% to 1,660p in early morning trade on Wednesday.
Imperial’s top-five combustible markets, which contribute to over 70% of adjusted operating profit, have seen a growth in aggregate market share as a result of maintaining strict pricing discipline, and overall tobacco volume is on track.
The gains obtained from the United States, the United Kingdom, and Australia more than offset losses in Germany and Spain.
Customers in Greece and the Czech Republic have responded favourably to pilots of the Pulze heated tobacco system, as well as an improved consumer marketing offer for its blu vapour product in the United States.
Imperial made solid progress toward its strategic goal of creating a long-term, consumer-focused Next Generation Product (NGP) business, and it will offer an update on our next steps in the interim results which will be announced on 17 May 2022.
Due to the growth in Europe, first-half NGP sales are likely to be somewhat higher than in the previous period.
Imperial Brands is on target to ensure full-year results following the group’s updated guidance released on March 15, with adjusted operating profit growth of about 1% and full-year net sales increase of roughly 0-1% in constant currency.
On a constant currency basis, first-half group net sales are forecast to be almost flat compared to last year, which is in line with the group’s estimates due to a decline in cigarette sales in Europe, which has offset increases in other markets.
On a constant currency basis, H1 2022 group adjusted operating profit is forecast to increase by roughly 2%, owing to lower NGP losses.
Tobacco performance will be heavily weighted in H2, as projected. On a constant currency basis, H1 2022 tobacco operating profit will be roughly unchanged compared to last year, with additional investment in Imperial’s strategy offsetting the advantage of lower US litigation costs compared to last year.
Translation foreign exchange is estimated to be a 2% headwind on first-half earnings per share and a 1% drag on full-year earnings per share at current exchange rates.
The return to pre-COVID spending patterns as Northern Europeans resume overseas travel, as well as price phasing in some sectors, have boosted Europe’s performance. Price increases later in H1 will aid a greater revenue performance in H2 2022.
On a 12-month basis, Imperial Brand’s adjusted operating cash conversion continues robust, and it is on track to meet half-year and full-year forecasts.
The group’s adjusted net debt to EBITDA ratio will improve year on year, with a 12-month leverage forecast to be 2.4x at the H1 2022, down from 2.6x in 2021, reflecting seasonal cash flow changes. However, Imperial anticipates a year-over-year increase in leverage for the entire year.
Imperial is still in talks with a local third party regarding transferring its Russian assets and operations as a going concern in an organised way.
Meanwhile, the group continues to assist our Ukrainian colleagues and their families with transportation and lodging to allow them to flee the most severely affected areas of the crisis, as well as resettlement assistance for those who have already left Ukraine.
