Imperial Brands Share Discussion Threads

[dmore2] 19/5/2020 07:51

divi 20.85p end of month

[milliethedog] 19/5/2020 07:50

"I’ve considered Imperial Brands a few times over the years. But I don’t like seeing a share price in a long-term downtrend. It has lost 60% of its value since 2016. It is also selling off assets — hitting future profitability — to pay what I believe is an unsustainably high dividend. I’d avoid."



....new broom was always going to cut imo

[muscletrade] 19/5/2020 07:48

Results are a bit of a dogs breakfast and while not exactly happy with a 33% reduction in dividend on the bright side it is still offering a 8.3% yield based on last nights closing price.
the reduced div will save £0.63 Bn and if we add a £1.0 Bn from the cigar biz then if it was all applied to debt then total nett debt at end of year would be reduced to sub £10Bn from £11.4Bn at end of 2019.
Also encouraging to see tobacco revenue actually increased noted by dmore2 above.
One might argue that Management are not wasting a crisis(covid19) and are saving the new CEO the embarrassment of reducing the dividend himself while strengthening the balance sheet.

[spud] 19/5/2020 07:47

Indeed - All IMB needs to to is implement the BATS blueprint. Now where's that shiny new broom?spud

[kiwi2007] 19/5/2020 07:39

Mmm... not good. Not sure how much of this is baked into the price?

BATS looking the far superior ciggy company.
Long BATS and short IMB has been easy money for the hedge funds for a long time and won't stop after these results.

[skinny] 19/5/2020 07:39

Nothing really to argue about :-

.

[32campomar] 19/5/2020 07:22

To be fair the yield is still over 8% which is still huge in today's world, a large income, tax free in an ISA. Maybe this is more forward looking than I first thought.

[pete160] 19/5/2020 07:13

A reduction of a third from 13% is still not bad for income seekers and certainly better than vod, bt, shell, all of the banks, the vast majority of the insurers, etc. It could have been a lot worse!

[dmore2] 19/5/2020 07:12

revenue and tobacco volume are positive in my opinion

Overview - Adjusted Basis Half Year Result Change
================== ====================
Constant
2020 2019 Actual Currency(1)
======================================== ======== ======== ====== ============
Total tobacco volume bn SE 114.6 115.2 -0.5% -0.5%
================================ ====== ======== ======== ====== ============
Tobacco net revenue GBPm 3,509 3,508 0.0% +0.9%

[p0pper] 19/5/2020 07:11

That's obviously why the share price is struggling

[watfordhornet] 19/5/2020 07:03

Not great results, dividend reduction plus less than positive forward looking statement.Not too much to like

[lendmeafiver] 19/5/2020 07:02

Dividend to be rebased by one third; implying an annual dividend for 2020 of 137.7 pence per share

[32campomar] 19/5/2020 07:02

Dividend cut by a 1/3 FFS

[lendmeafiver] 18/5/2020 18:14

Will be an interesting morning

[spud] 18/5/2020 18:09

My gut is telling me that they will. spud

[32campomar] 18/5/2020 17:58

Fingers crossed they leave the dividend alone tomorrow!

[philanderer] 18/5/2020 13:56

Questor: even if Imps cuts its divi, income investors will still make a juicy return.

Hold

[minerve 2] 17/5/2020 21:06

Contrary to popular belief share buybacks are done - not to create a willing buyer in the market - but as an efficient way of allocating surplus capital for a good return. If a company is mature, and cannot easily see a path to generate decent growth, share buy backs are one of the best ways of generating excellent returns - if the mature business still has enduring competitive advantage such that it maintains good returns on equity.

The profits could be used to pay off debt, pay a dividend or buy back the shares. If the company can generate 20% ROE, for example, by purchasing its own shares, why should it pay you a dividend instead if you are unlikely to get this elsewhere? Tax issues generally sway in share buy-backs favour also.

Share buybacks are very good if the return on equity is good, it comes from surplus cash, and other things, such as Capex, are not neglected in order to do it. Unfortunately, many companies have implemented share buybacks when real profits (and cashflows), not falsely adjusted, don't create such a surplus and it has been done at the expense of other things to artificially boost earnings per share and with it director remuneration. QE and cheap finance has allowed companies to get involved in buy-backs when in reality the ongoing economics of the business make it unsustainable and thus its long-term benefits are rarely seen because the process has been temporal.

If you look to very good companies that are well run, have the owners in mind as a priority and generate surplus cash over the long term the benefits of share buy-backs are clear to see. Shares have been bought back and have genuinely improved earnings per share on a lower equity base.

I would recommend investors look at the Financial Report for Next year 2013. In there is a good explanation of how Next executes a share buy back policy and how it benefits investors.

[spud] 17/5/2020 18:25

Only benefits Executives through bonuses which strangely enough are nearly always triggered by an increase in eps.

Spooky that!

spud

[spud] 17/5/2020 18:22

And in the same breath Sears.....:-(spud

[32campomar] 17/5/2020 18:20

Nope. Total waste of time.

[tomleafs] 17/5/2020 17:24

@spud For constructive buybacks check out Autozone from early 90's (US company).

[tomleafs] 17/5/2020 17:22

I wish for once these journalists and commentators would compare the debt of BATS to IMB. It would help shine a light on the valuation difference between these two companies that operate in the *same* industry. For instance, as of 2019 BATS had £42bn net debt to £9bn operating cash flow which is a 4.67x multiple whereas IMB had £10.5bn net debt (includes recent cigar sale) to £3.2bn operating cash flow for a lower multiple of 3.28x. In other words, it would take just over 3 years for IMB to re-pay all its debt from cash flows compared with almost 5 years for BATS. So why are investors willing to pay 50% more for each unit of profit from a highly levered BATS than for IMB? Is it purely for the better management and brands over at BATS? Is that too large of a gap for two companies doing the same thing with similar overall results over time? For example, both IMB and BATS have returned around 18% per year since 1996 with dividends re-invested.


I also have to disagree regarding Bogdan's comment, the sustainability of the dividend surely resides more on the cash flow side of things. If a company has ample cash to pay the dividend, invest in capex and reduce the outstanding debt then who cares how much of the balance sheet is in intagibles? Those intangible brands are what is helping drive the massive amounts of free cash that funds the dividend.

As I think I've mentioned before my two main concerns here are (1) government windfall tax to help pay for the pandemic (2) new bloke taking an axe to the dividend to appease a few innumerate shareholders.

[lendmeafiver] 17/5/2020 17:16

What would the share price be now without the buy backs, who knows.

[spud] 17/5/2020 17:08

Can anyone put forward a Company case study that has materially benefited from share buybacks? Even the mighty Shell, despite years and billions of $$ is now terminating it's program with little/nothing to show for it!spud