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Imperial Brands

Imperial Brands PLC Foundations set for accelerated revenue growth

Imperial Brands PLC (LON:IMB), today announced interim results for the six months ended 31 March 2019.

“This has been another half of pleasing underlying tobacco performance enhanced by the growing contribution of our NGP business, with overall revenues up 2.5 per cent; and Europe and the Americas both growing revenue by 4%. In tobacco, we continue to focus on our longstanding brand and market priorities, and are delivering high margin sales growth. Our Asset Brands continue to outperform and now represent two thirds of our revenue. We have made significant progress in building our NGP business with investment behind myblu generating awareness and consumer adoption, resulting in leading retail shares in most markets. We are building on this momentum in the second half focused on further omnichannel expansion and new product initiatives. We have set the foundations for accelerated revenue growth and we are on track to meet our full year expectations.”

Alison Cooper
Chief Executive

Overview – Adjusted Basis

Half Year Result





Constant Currency1

Tobacco volume

bn SE





Net revenue2






Asset Brand net revenue2






Tobacco & NGP adjusted operating profit






Distribution adjusted operating profit






Total adjusted operating profit






Adjusted earnings per share






Adjusted net debt





Overview – Reported Basis

Half Year Result










Operating profit





Basic earnings per share





Dividend per share





Reported net debt




Constant currency removes effect of exchange rate movements on the translation of the results of our overseas operations.

2 2018 revenue restated following adoption of IFRS 15.

On Track to Deliver FY19

· Net revenue up +2.5% driven by strong NGP growth and a good underlying tobacco performance

· Tobacco benefiting from strong price/mix while volumes temporarily affected by shipment timings

· NGP revenues of £148m (£158m pre IFRS 15) up +245% with growth in Europe, the US and Japan

· Quality growth from Asset Brands with net revenue up 7.0%; +280bps as percentage of net revenue

· Good growth in tobacco profitability driven by the Americas and Europe

· Adjusted operating profit reflects additional £94m gross NGP investment & £40m profit on OTP disposal last year

· Reported operating profit up 38.1% with lower amortisation, the prior year impact of distributor administration, lower restructuring costs and an increase in the contingent consideration liability for the Von Erl acquisition

· On track to deliver growth in revenue, adjusted EPS and cash conversion in line with full year expectations

· Divestment programme on track

Creating Something Better for the World’s Smokers

Investing in NGP growth

· Strong year-on-year growth across all divisions driven by blu

· Continued momentum in consumer offtake of blu with a slowdown of category growth in US

· Established blu as a leading vape brand in growing retail channel in UK, France, Germany, Spain, Italy and Japan

· Continued growth in consumer offtake, targeted retail programmes and product initiatives underpin H2 delivery

· Japanese city pilot of Pulze, our heated tobacco offer, following positive consumer feedback

Tobacco revenue and margin supported by strong price/mix

· TobMax delivering good underlying net revenue and operating profit growth driven by Europe and Americas

· Tobacco price mix +6.5%; c.90% of planned FY pricing now embedded

· Volume decline of 6.9% impacted by shipment timings; underlying decline of 4.5%, in line with industry

· Strong US performance with cigarette share growing for first time since acquisition

· Tobacco margins improved by 90bps

Cost and capital discipline

· Divestment programme on track; including sale of Premium Cigars business

· Cost optimisation savings of £60m expected for full year; supports tobacco margins and NGP investment

· Cash conversion of 66% reflecting the timing of duty payments; expect just under 90% for the full year

· Adjusted net debt increased £0.3bn (12-month basis) reflecting working capital timing; reported net debt up £0.4bn

· On track to deliver further deleverage at the full year

· Interim dividend of 62.56p up 10%


Driving Growth to Create Value
We have made positive progress in the first six months of the year as we continued to focus on building our NGP business and maximising opportunities in tobacco.

Our expectations for full year revenue, earnings and cash generation are unchanged. We expect to deliver constant currency revenue growth at, or above, the upper end of our 1-4% revenue growth range, driven by consistent growth in tobacco and an increase in NGP revenues. Our medium-term guidance for constant currency EPS growth remains in place. In tobacco, our visibility on shipment timings and embedded pricing support a much stronger second half. In NGP, investment behind our blu Adoption Model is driving awareness, trial and repurchase. We are continuing to invest behind brand equity, product initiatives and omnichannel engagement, all of which will support an acceleration in growth during the second half.

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