Trading for next-generation products has continued to be disappointing, with revenues expected to be around 30% lower than last year
Imperial Brands PLC (LON:IMB) said sales and cash generation have been slightly better than expected in the past year but earnings are likely to be lower.
New chief executive Stefan Bomhard, who joined at the start of July and has strengthened his executive team with a number of new appointments, said he will “share some initial observations about the business” alongside full-year results on November 17 and a more detailed strategic update before the end of March 2021.
Under the strategy of his predecessors and amid the coronavirus pandemic, tobacco revenue increasing around 1% in the year to end-September at constant currency rates, with better than expected overall volumes offsetting weaker duty-free sales.
In Next Generation Products (NGP), including its Blu vaping range, Pulze heat-not-burn tobacco and Skruf snus, the board made the decision in the past year to significantly reduce investment, after disappointing performance led to two profit warnings.
Trading for NGPs has continued to be disappointing, Bomhard said, albeit in line with low expectations, with the level of underlying losses reduced in the second half and net revenue is expected to be around 30% lower than last year at constant currencies.
Group net revenue is expected to be broadly flat on last year at constant currencies, while earnings per share will be down by around 6% at constant currencies, with foreign exchange swings imposing around a 1% headwind.
For one of the FTSE 100’s highest dividend-yielding companies, underlying cash conversion was said to be ahead of expectations, benefiting from lower investment and restructuring charges, some of which will be shifted to the new financial year.
The group said the disposal of its Premium Cigars business is on track to complete before the end of the month, with two non-refundable down payments having been received.
Source – Proactive Investor
