Imperial Brands Reports Decline in Profit but EPS Grows 19.1%

Imperial Brands Plc reports a drop in profit before tax for fiscal 2024, yet sees a significant increase in earnings per share. Despite lower revenue, the company remains optimistic with strategies aimed at future growth and dividend increases.

Date: 19-11-2024

AI Rating: 6

The report outlines several key financial metrics important for investors considering Imperial Brands Plc. Firstly, the company's profit before tax decreased from £3.11 billion to £3.03 billion, reflecting a negative trend that could raise concerns among investors. However, the earnings per share (EPS) grew significantly by 19.1%, from 252.4 pence to 300.7 pence. This increase in EPS is a positive sign and may attract investors looking for growth despite the overall decline in profit.

Furthermore, the adjusted profit before tax increased slightly from £3.48 billion to £3.52 billion, signaling a potential stability in operations that might bolster investor confidence. Similarly, the adjusted earnings per share showed improvement, rising from 278.8 pence to 297.0 pence, which indicates effective management in enhancing shareholder value.

The report also highlights that revenue decreased by 0.6% from £32.48 billion to £32.41 billion, and net revenue fell from £21.66 billion to £21.31 billion, reflecting challenges the company faces in the tobacco market. Volume declines of 4.0% further emphasize this struggle. Investors should note that although revenue is decreasing, growth in next-generation products (NGP) has been acknowledged, suggesting a strategic pivot that could support future revenue streams.

Additionally, the company is planning to increase its dividend by 4.5%, which is a strong indication of confidence in its cash flow management. Such increases can enhance appeal to income-focused investors.

Looking to the future, Imperial Brands anticipates growth in group adjusted operating profit driven by strategic investments. For fiscal 2025, a forecast of high-single-digit EPS growth is promising, particularly in the context of low single-digit revenue growth targets. This may indicate a recovery trajectory that could be favorable for investors.

In summary, while there are some concerning trends in profit and revenue, the company's focus on EPS growth, dividend increases, and strategic planning for future growth positions it relatively well in the market. Investors might view the current situation as a mixed bag, weighing both the challenges faced and the management's proactive strategies.

Stocks: IMB.L IMBBF.PK IMBBY.PK