# Imperial Brands continues to perform well and remains on track to deliver full-year results in line with expectations

- Link: https://www.directorstalkinterviews.com/imperial-brands-continues-to-perform-well-and-remains-on-track-to-deliver-full-year-results-in-line-with-expectations/4121026605
- Published: 2021-10-06T07:25:57+01:00
- Author: Amilia Stone

**[Imperial Brands PLC](https://www.directorstalkinterviews.com/ftse-company/imperial-brands-plc/imb.l)**(
LON:IMB) has announced its pre-close trading update.

·      Delivering in line with guidance and on track to meet full year expectations

·      Focus on top five priority markets beginning to arrest long-term share declines

·      Market trials underway with heated tobacco in Czech Republic and Greece, 
and blu in the US

·      Significant new hires to strengthen capabilities across the Group

·      Continued strong cash generation supporting our planned investment behind
the new strategy

> **Imperial Brands Chief Executive Stefan Bomhard commented** “We have made good
> progress in implementing our strategy through a sharper management focus, greater
> investment behind our priority combustible tobacco markets and new market trials
> in heated tobacco and vapour. We are building a high-performance culture with 
> the introduction of new more consumer-focused ways of working, and have made a
> significant number of new hires to enhance our capabilities in key areas.  I am
> pleased to report the business continues to perform well and we remain on track
> to deliver our full-year results in line with expectations.”

Group net revenue is expected to grow by around 1 per cent on an organic, constant
currency basis, driven by continued strong pricing in tobacco.

In our combustibles business, greater focus on our five priority markets is beginning
to stabilise the long-term aggregate market share performances in these markets 
with share expected to be slightly lower by around 2-3 basis points, compared with
a 17 basis point decline in the prior year. We are stepping up our investment behind
our strategic initiatives in each of these priority markets to drive performance
improvements. Overall tobacco volumes are in line with expectations and total Group
cigarette market share is expected to grow by c. 20 basis points. The net effect
of the COVID-19 travel restrictions and changes in consumer buying patterns has 
been a small mix benefit, although this is beginning to reduce as restrictions are
lifted and is likely to unwind further in FY22.

In Next Generation Products (NGP), we are committed through our new strategy to 
make a meaningful contribution to harm reduction, led by consumer needs. As anticipated,
second-half NGP revenue is expected to be at a similar level to the first half, 
reflecting the impact of market exits as we focus on the categories and markets 
with the best potential for sustainable growth. We have taken steps this year to
strengthen our capabilities and performance to create a solid foundation for future
growth. In line with our strategy, we have launched market trials for our heated
tobacco proposition in the Czech Republic and Greece, as well as a trial of an improved
consumer marketing proposition for our vapour product, blu, in Charlotte, North 
Carolina. We will be monitoring the consumer response to these trials over the coming
months and will update on progress during 2022.

Group adjusted organic operating profit growth is expected to be in line with our
guidance of low to mid-single digit constant currency growth, reflecting significantly
reduced losses in NGP and increased Distribution profit. The tobacco business has
performed well although adjusted operating profit will be slightly lower than last
year, as previously guided, as a result of the planned increased investment to support
our strategic plan as well as lower stock revenue/profit in Australia (c. £90m) 
and US state litigation settlement costs (c. £50m).

At current exchange rates, translation foreign exchange is expected to be c. 3 per
cent headwind to full year earnings per share. As previously announced, the adjusted
effective tax rate is expected to increase this year from 21 per cent to around 
23 per cent.

Full-year adjusted operating cash conversion is expected to be in line with expectations
with the unwind of the temporary Logista cash benefits in FY20 resulting in a working
capital outflow. We remain focused on strengthening the balance sheet and continue
to make progress towards achieving our target leverage of the lower end of our 2-
2.5 times net debt to EBITDA range on a sustainable basis.

Imperial Brands’ annual results for the 12 months ended 30 September 2021 will be
announced on 16 November 2021.

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