It’s been 10 years of 10 per cent dividend increases at Imperial Brands (IMB), and chief financial officer Oliver Tant doesn’t expect that to change any time soon. The 69 per cent payout ratio is backed by cash conversion of 97 per cent, and doesn’t appear to be coming at the expense of innovation either. Mr Tant said: "We’re producing £1bn in surplus cash flow, which doesn’t make the dividend feel like a constraint."
Loosely translated, innovation means developing next-generation products (NGPs), with the international roll-out of vapour product myblu expected to provide a timely boost to FY2019 sales. Net revenue from NGPs has increased to £200m, with around £300m expected this year. NGP sales could reach £1.5bn by 2020, which should make up for declining cigarette volumes over the longer term too. During the past year, the number of stick equivalents Imperial sold fell 3.6 per cent to 256m – albeit a slower decline than the 5 per cent decline reported across the wider industry.
Prior to these results, analysts at Liberum expected adjusted earnings per share (EPS) of 281p during the year to September 2019, compared with 272p in FY2018.
| IMPERIAL BRANDS (IMB) | ||||
| ORD PRICE: | 2,631p | MARKET VALUE: | £25.1bn | |
| TOUCH: | 2,630-2,631p | 12-MONTH HIGH: | 3,205p | LOW: 2,298p |
| DIVIDEND YIELD: | 7.1% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 605p* | NET DEBT: | 185% | |
| Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 26.5 | 1.53 | 149 | 128 |
| 2015 | 25.3 | 1.76 | 177 | 141 |
| 2016 | 27.6 | 0.91 | 66.1 | 155 |
| 2017 | 30.2 | 1.86 | 148 | 171 |
| 2018 | 30.5 | 1.82 | 143 | 188 |
| % change | +1 | -2 | -3 | +10 |
| Ex-div: | ** | |||
| Payment: | ** | |||
*Includes intangible assets of £19.1bn, or 2,005p a share **Two quarterly dividend payments due on 31 Dec (ex-div: 22 Nov) and 29 Mar (ex-div: 21 Feb) | ||||
