IMB finals

[77ss]

http://www.investegate.co.uk/imperial-b ... 00085802O/

A touch opaque (to me) but the 10.2% increase in both the Q3 and Q4 dividends is welcome - even though it is no more than their prior commitment.

The target of 'at least 10%' dividend growth p/a has been reiterated:

We continue to prioritise capital discipline and strong cash conversion to underpin our commitment to deliver dividend growth of at least 10 per cent next year and over the medium term

The market doesn't seem too impressed though. Share price down by over 2.5%. If I were not already overweight, I would be tempted!

[idpickering]

Divi 54.1p

Ex div 17 Nov 16

Divi paid 30 Dec 16

http://www.imperialbrandsplc.com/Invest ... l-calendar

[idpickering]

[quote][/quote]Immperial Brands reported a drop in profit for the year to end of September, but revenue rose and the FTSE 100 tobacco company upped its dividend by 10%.

Net profit fell to £631m from £1.7bn as costs rose, but revenue was up 9.3% to £27.63bn and Imperial lifted its dividend to 155.2p per share from 141p the year before.

In addition, the group announced plans to invest £300m in its growth and specialist brands in the key markets that offer the best opportunities for “quality growth” and said it will be supported by a new phase of cost optimisation, targeting a further £300m of annual savings by 2020, at a cost of £750m.

Chief executive Alison Cooper said: “We delivered another strong performance this year with great results from our expanded US business, and we further improved the quality of our growth. We grew the dividend by 10% for the eighth consecutive year and remain committed to this level of increase over the medium term.

http://www.digitallook.com/news/news-an ... 27968.html

[tjh290633]

Divi 54.1p

Ex div 17 Nov 16

Divi paid 30 Dec 16

http://www.imperialbrandsplc.com/Invest ... l-calendar

They also declared the final:

The Board has approved a further interim dividend of 54.1 pence per share and will propose a final dividend of 54.1 pence per share, bringing the total dividend for the year to 155.2 pence per share, up 10 per cent and in line with our policy of growing dividends by at least 10 per cent per year over the medium term.

The third interim dividend will be paid on 30 December 2016 with an ex-dividend date of 17 November 2016. Subject to AGM approval, the proposed final dividend will be paid on 31 March 2017, with an ex-dividend date of 16 February 2017.

see [url]http://www.investegate.co.uk/imperial-brands-plc--imb-/rns/final-results/201611080700085802O/
[/url]
TJH

[Dod1010]

Ian

Where did you get your figures of the drop in operating profit? You say a drop from £1.7 billion to £631 million, 'as costs rose'. If costs rose that much, heads would be rolling if you think about it. Are we talking about Imperial Brands, the tobacco company?

According to the Company's own press release the Operating Profit has increased from £1,988 million to £2,229 million, an increase of 12.1% and EPS reflects that with an increase of the same, hence the increase in the dividend of 10%.

The lukewarm reception in the market is probably because it reflects what they have already indicated, but an increase in the dividend of 10% is fine by me. Why would it not be?

Dod

[toofast2live]

Lovely little earner. Profits up. Forecast 2017 p/e of under 13, forecast 2017 yield of about 4.7%, and a medium term commitment to 10% growth in dividend. This should be in everyone's shopping basket - unless they object to the undesirable consequences of the product itself. But then the use of ciggies is now down to an informed choice in most parts of the world, much like alcohol and other, less legal drugs.

Oh yes, and as for those profits: total adjusted operating profit increased 16% on a reported basis and up 10.4% on a constant currency basis.
Earnings per share increased 17.5% to 249.6p.

And some talk of a stagnating economy plagued by low growth. Not in fags!

[Minesadouble]

I'm more than happy with that dividend, keep them coming.
I wonder if the market reaction is due to sterling weakness?
Much of IMB revenue comes from overseas.
It might have been possible for IMB to have offered something better still?
I assume any forex upside helps the sustainability of the dividend stream.
Like I said more than happy though.

[idpickering]

Dod,

Where did you get your figures of the drop in operating profit?

That was from that link provided by digitalook .

As an aside, IMB are one of my highest weighted holdings, and are held alongside BATS, with a total sector weighting in my HYP of 10.52% as I type, and are my second largest 'bet'. I have no issue holding both baccie shares and shall continue to do so.

Regards,

Ian.

[idpickering]

Sorry Dod, have a look at the link in my post from which you and I quoted.

Cheers,

Ian.

[Gengulphus]

Where did you get your figures of the drop in operating profit? You say a drop from £1.7 billion to £631 million, 'as costs rose'. If costs rose that much, heads would be rolling if you think about it. Are we talking about Imperial Brands, the tobacco company?

Actually, Ian didn't write the words in that post - he quoted them from the DigitalLook link he gave at its end - but mishandled the quoting BBCodes.

As to where DigitalLook got them from, the obvious likely source is the final results RNS. Going to the Investegate link http://www.investegate.co.uk/imperial-brands-plc--imb-/rns/final-results/201611080700085802O/ to it given in the OP of this topic and searching it for 631 quickly locates the following lines near the bottom of the income statement:

Code: Select all

                           2016   2015
Profit for the year         669  1,723
--------------------------------------
Attributable to:
Owners of the parent        631  1,691
Non-controlling interests    38     32


(Ugh! Getting that right was painful - I won't be doing much more of it until I've sorted out a better way of doing it... Yes, I know about the spreadsheet techniques, but they're sledgehammers to crack a walnut on small tables like that one!)

So the figure is the final profit figure for the year, net of minority interests, and not operating profit. Looking further up the income statement, operating profit is nicely up from £1,988m to £2,229m, and the discrepancy between the rise and the big fall in the final outcome is a big rise in net finance costs, from £261m to £1,350m.

Another search, this time for "finance costs", finds the following explanation - make of it what you will!

Adjusted net finance costs were higher at £524 million (2015: £467 million) reflecting the full year impact of the cost of the USA acquisition debt partially offset by a reduction in our all in cost of debt.

Reported net finance costs were £1,350 million (2015: £261 million), incorporating the impact of the net fair value and exchange losses on financial instruments of £807 million (2015: gains of £226 million) and post‑employment benefits net financing costs of £19 million (2015: costs of £20 million).

Gengulphus

[kiloran]

Code: Select all

                           2016   2015
Profit for the year         669  1,723
--------------------------------------
Attributable to:
Owners of the parent        631  1,691
Non-controlling interests    38     32


(Ugh! Getting that right was painful - I won't be doing much more of it until I've sorted out a better way of doing it... Yes, I know about the spreadsheet techniques, but they're sledgehammers to crack a walnut on small tables like that one!)

The problem with manually typing a table is that the text input uses proportional font even though the text between the code tags is ultimately displayed as fixed-width font.
Much easier to create the table in a simple text editor (like Notepad) with a fixed-width font and then copy/paste between the code tags

--kiloran

[Dod1010]

Thanks Gengulphus.

What I make of your final reference is that just as profit increases on translation to sterling with the weakening pound (as much of the profit is earned in other than sterling) so debt increases on translation when denominated in other than sterling, and that I suspect is the meaning of the reference to 'net fair value' of the debt. To compound it they also had exchange losses for the same reason. These are simply a 'book entries' I imagine, and much of the extra debt will have arisen to buy the US brands. Imps are obviously pretty confident that they can service the debt with no difficulty (after all the earnings will be in mostly US Dollars and so paying off the debt, in the same currency will be fine)

So we are all correct, just looking at different bits of the report.

[Gengulphus]

What I make of your final reference is that just as profit increases on translation to sterling with the weakening pound (as much of the profit is earned in other than sterling) so debt increases on translation when denominated in other than sterling, and that I suspect is the meaning of the reference to 'net fair value' of the debt.

Yes, though I suspect there may also be exchange-rate hedging involved, basically because of the use of the term "financial instruments". That could just be bonds and other financial instruments of a debt-like nature, but there's certainly the possibility of derivatives used for hedging in there. Not something I'm going to try to dig into, though - it would take me more time than it is worth, especially as I would almost certainly have to refresh / expand my very limited knowledge of such things!

Gengulphus

[Dod1010]

Funny that the share price for Imperial Brands has fallen away quite sharply this week whilst BAT has stormed ahead. Not that we should be worrying of course but I am always a bit concerned in these circumstance in case the market knows something that I have failed to pick up.

The IC today has picked up the drop in profit but it concludes as I have done that it is mostly down to foreign exchange movements. (ie the value of its debt in US Dollars). The yield must be around 4.5% and surely a good buy at the current levels because as the IC also says, the dividend will not be affected (hope not!)

[samosh]

Funny that the share price for Imperial Brands has fallen away quite sharply this week whilst BAT has stormed ahead.

BAT is down this week 6.75%

[idpickering]

Funny that the share price for Imperial Brands has fallen away quite sharply this week whilst BAT has stormed ahead.

BAT is down this week 6.75%

I am very surprised to see tobacco stocks taking a hit since Trumpday. At times of disruption you'd think they'd be the 'go to' stock? I'm not concerned in the slightest about continuing to hold onto mine, but am top heavy in them, and shan't be topping up anytime soon.

Regards,

Ian.

[toofast2live]

cost optimisation

I just love management speak. Plain old cost reduction just wouldn't cut the mustard, would it?

Anyway, despite the obvious use of management consultants, I, like you lot, consider them indispensable for my retirement jollies. I do sometimes have a moral twinge, but no one forces the users to use.

[Dod1010]

cost optimisation

I just love management speak. Plain old cost reduction just wouldn't cut the mustard, would it?

Imperial are good at management speak as you call it. I have noticed it quite often in their reports but of course literally cost optimisation is not at all the same as cost reduction. In fact in their recent announcement they reported on quite a significant investment in brands, 'to be funded by a new phase of cost optimisation targeting a further £300m of annual savings at a cost of £750m'. So the cost optimisation is £750 million as a one off to make annual savings of £300 million.

If they are using 'optimisation' correctly-and who is to say they are not?-had they planned on spending say £900 million they might have saved only another £5 million per annum, which would have been less than optimal. They will no doubt have done the financial modelling and concluded that £750 million is the optimal spend, ie they can extract the maximum savings from that level of expense.

However equally your cynicism may be justified, I do not know.