15 May 2024
If you are covering Imperial Brands’ latest financial results, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
“Imperial delivered a set of results this morning that can be described as a little bit boring. However, for such a cheap stock in such an unloved sector, boring is exactly what you need to help drive the share price higher. Profits were up around 3% for the tobacco group, driven almost completely by price increases. Volumes continue to decline, but not at a rate that will cause huge concern, although the US is a slight worry.
“Ultimately Imperial is a mature company operating in a mature sector, so all the focus from investors will be on the cash returns, which Imperial continues to do very well. Its interim dividend has increased 4% to offer an 8% yield, while the share buyback equates to roughly 6% of the market cap. The business has reiterated its guidance which supports our expectation that the share buyback will be reloaded when the current programme ends, and thus rewarding shareholders in the process.
“For those that are willing to take on exposure to the tobacco sector, Imperial offers a compelling story for investors with such strong shareholder returns that appear to withstand the trend of consumers moving away from traditional tobacco.”
