Imperial Brands shares rise despite earnings drop

FTSE 100 tobacco giant Imperial Brands (LON:IMB) beat forecasts as it announced its first-half results this morning. While net revenues fell by 5% to £3.5 billion, the company outperformed the wider industry, and volumes in its growth brands were up by 6.3%. Total revenues fell by just 0.1%, partly due to investments in alternative products including eCigarettes.

Earnings per share took a significant hit and dropped to 51.7p, but management have recommended that dividends be raised by 10% to 56.87p. The share were up by 5.67% to 2,768p at 14:30 BST, but they remain a third lower than this time last year.


CEO Allison Cooper confirmed that the group was still looking to cut costs and raise funds through divestments, and said that the company is targeting proceeds of £2 billion over the next 1-2 years. Earnings from the sales would be used to pay down debts, invest in growth, and return capital to shareholders.

Analysts from Hargreaves Lansdown said that the firm looks attractive to income investors, but warned that the company’s debt levels and declining industry meant that the generous dividend policy couldn’t continue indefinitely. Additionally, while it may be possible to continue focusing on margins and selling non-core businesses, there is also the potential for new regulatory constraints to cause issues for Imperial Brands’ business in future.