09 April 2024
If you are covering Imperial’s latest trading update, please see the following comment from Chris Beckett, head of equity research at Quilter Cheviot:
"Imperial posted a solid update this morning, in line with expectations ahead of its first half results due in just over a month’s time. Imperial reiterated its guidance for both the half and full year, though progress is expected to be second half weighted with only modest improvement in H1. Meanwhile, strong cash generation is expected to fund an increased dividend and generous buyback. Compared to its very low valuation, this morning’s update is positive.
"Year on year, revenues are ahead as a result of strong tobacco pricing and the progress made with its next generation portfolio of vaping and heated tobacco products as these products were rolled out to 20 countries. Imperial also maintained its market share of traditional cigarettes in its five priority markets, gaining in USA, Spain and Australia, but offset by losses in UK and Germany.
"Imperial has £500m of its £1.1bn buyback remaining, or 3.3% of market cap, which is very enhancing at the current valuation. Imperial remains a very cheap stock and benefits from the cashflows to fund a 9% dividend and a 7.5% annual buyback. While it is not as strategically well placed as Philip Morris or BAT, this is reflected in the valuation."
