Volumes at Imperial Tobacco (IMT) may be losing puff, but moves to cut costs once again helped ensure growth at the bottom line. The group sold 285.1bn stick equivalents in the year to September - a 3 per cent drop on the previous financial year despite the 5bn extra cigarettes it sold in the US thanks to the ITG Brands business acquired from Lorillard (US: LO) in June. The conflict in Syria and the impact on its neighbour Iraq hit sales in the two countries, denting group numbers. At the same time, chief executive Alison Cooper cited strong growth prospects in Russia, Saudi Arabia and Taiwan.
A hike in the dividend was facilitated by an "unusually high" 97 per cent cash conversion rate, according to chief financial officer Oliver Tant. A one-off unwinding of working capital from the US acquisition drove the number higher; the long-term rate should be in the low 90s. Cash generation will be supported by the company's cost-cutting plan, which has yielded £85m out of a planned £300m due by September 2018. In mid-November, the group can also implement its pricing strategy on the US brands it acquired, after the expiry of a so-called 'standstill' period.
Analysts at Canaccord Genuity expect pre-tax profits of £2.93bn in the year to September 2016, leading to EPS of 236.9p, compared to 210p for FY2015.
| IMPERIAL TOBACCO GROUP (IMT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,477p | MARKET VALUE: | £33.3bn | |
| TOUCH: | 3,471-3,480p | 12-MONTH HIGH: | 3,567p | LOW: 2,661p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 556p* | NET DEBT: | 214% | |
| Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 29.2 | 2.15 | 177.0 | 95 |
| 2012 | 28.5 | 1.08 | 68.0 | 106 |
| 2013 | 28.2 | 1.26 | 96.0 | 116 |
| 2014 | 26.5 | 1.53 | 148.5 | 128 |
| 2015 | 25.3 | 1.76 | 177.4 | 141 |
| % change | -4 | +15 | +19 | +10 |
Ex-div: 3 Feb Payment: 31 Mar *Includes intangible assets of £18.7m, or 1,950p a share | ||||
