Imperial Brands Sees Share Price Rise

Shares of Imperial Brands (LON:IMB) rose on Tuesday following stronger-than-expected revenue growth for fiscal year 2024.

At 4:55 am (0955 GMT), Imperial Brands was trading 1.2% higher at £2,429.

> “We are reassured by Imperial Brands' healthy top-line performance (particularly NGPs), with FY25 guidance coming in line with expectations,” said analysts at RBC Capital Markets in a note.

The results exceeded market expectations, with growth in the core tobacco business and robust gains in next-generation products (NGPs) driving a positive market response.

Imperial Brands reported FY24 tobacco and NGP net revenue growth at constant currency of 4.6%, surpassing the consensus forecast of 3.3%.

The stronger performance was supported by a moderation in declines of cigarette volumes, which fell by 4% compared to a 7.1% decline the previous year. Price/mix gains remained solid at 7.8%, nearly matching the 7.9% seen in FY23.

The NGP segment, which includes products like heated tobacco and vape, saw net revenue growth of 26% at cFX, marking the second consecutive year of double-digit expansion and signaling Imperial’s ability to capture share in this fast-growing market.

Gross margins in the NGP segment improved, reducing adjusted losses and reinforcing confidence in the company’s investments in NGPs.

Adjusted earnings before interest and tax grew by 4.6% at cFX, slightly surpassing consensus expectations of 4.4%, although absolute EBIT was affected by foreign exchange headwinds. The company’s adjusted earnings per share came in 1% ahead of forecasts due to favorable interest and tax outcomes.

> “We think the slight delta in EBIT guidance vs our expectation is largely due to continued investments behind Zone,” said analysts at Barclays (LON:BARC) in a note.

Imperial’s guidance for FY25 indicates steady performance, with net revenue growth expected in the low single-digit range and EBIT growth around the mid-single-digit level at cFX.

Analysts at Morgan Stanley (NYSE:MS) view the company's outlook as largely aligned with market expectations, with no major revisions anticipated for consensus EPS.

Imperial has reported continued market share gains in four of its top five tobacco markets, including Germany. However, the UK remains a weak spot, with a 0.5 percentage point decline in market share over the year.

As FY25 marks the final year of Imperial’s current five-year transformation plan, the company plans to outline its next phase at a Capital Markets Day in March 2025.