Imperial Brands Share Discussion Threads

[dmore2] 10/8/2020 18:15

Vat will only be 5% next year

[meijiman] 10/8/2020 12:30

Great post tom.....really points out the hopeless mismanagement of a decent company during the stewardship of the bird brain.

[tomleafs] 10/8/2020 12:12

EssentialInvestor, debt reduction has been non-existent since 2016 as the 10% annual div increases ate up ever increasing amounts of free cash flow. For example, in 2019 we had interest of around £500m, dividends/buybacks of £2bn and £400m of capex which left basically no free cash flow for debt reduction. The recent div cut will rebase annual payments to around £1.3bn per year which should result in over £500m of net debt reduction per year going forward.

I agree with your point regarding the premium cigar and logista sales reducing cash flow. It's worth bearing in mind the £500m net debt paydown will save approx. £17m a year in interest payments going foward (assuming 3.5% rate) which will somewhat offset the reduced profit from asset sales.

Unfortunately we will have to wait until November to see the state of affairs which leaves a lot of time for the price to drift lower! ATB

[watfordhornet] 09/8/2020 21:33

It's ok - I understandjust looked at a few posts he posted. Its the Warren Buffet type person who sold at other things at 27p and bought back again at 3.5p.Is anyone that has any wealth going to bother posting on ADVFN?

[watfordhornet] 09/8/2020 21:23

Exactly.find it bizarre that someone one would post that. All for negative comments but why would you be posting in here if not a holder and never likely to be

[spud] 09/8/2020 18:21

Best not invest then jimbo!spud

[jamesto2] 09/8/2020 17:38

I can see £10 this year as £13 billion debts is shocking !! RED FLAG

[stevey82] 07/8/2020 22:48

My break even price for this share is £22, I've finally accepted I will never get back to break even, will just have to pocket the dividends until it dies but lessons have been learned

[essentialinvestor] 07/8/2020 19:56

Tom, where is the debt reduction over the last 4 years?.

It's non existent - net debt at the 2016 FY is over half a billion
Lower than the last H1.

Unless you are allowing for IMB paying the entire recent cigar transaction
sale off debt. That transaction also reduces cash flow.

There was also a chunk of Logista sold down over the last 4 years.


Paying off the approx £950 million leaves debt circa £12.5 billion, very approx.

[gaffer73] 07/8/2020 18:41

They need to lower the divi and get rid of the huge debt pile. 5% divi is way more than any bank account pays. Shareholders gain divi and capital.

[minerve 2] 07/8/2020 17:49

Free cash flow is nearer £2bn than £3bn.

[rhubarbcrumble] 07/8/2020 15:57

Excellent analysis Tomleafs. Let's hope that the incoming chairman can turn the ship round.

[tomleafs] 07/8/2020 14:04

Tabhair be aware of the debt on your FCF calculations. The way I look at it is that we have net debt of around £12.5bn (including proceeds from cigar sale) and free cash flow of around £3bn a year. We also have interest payments running at around £500m a year. Hypothetically, if the company were to ditch the dividend and instead use FCF to repay large chunks of the debt each year then they would be debt free in 4-5 years time. The company could then switch back to paying a dividend and comfortably afford around £2.50 a year in FCF covered payouts (about 20% yield on £12 share price).

In reality the company has made the decision to do a bit of both and pay a £1.3bn dividend and use the remainder for debt pay down so it will take closer to 10 years to clear the debt. So the main question is whether the company can maintain cash flow at around the £3bn level - if it can then things should work out nicely over the next few years. ATB

[tabhair] 07/8/2020 12:48

This company is starting to look interesting to me.

Free cash flow is about £3b, market cap is £12b. It is (was until covid) continuing to grow at about 2% a year. Even with the recent dividend cut, its yielding 11%.

[pixtel] 07/8/2020 12:38

CEO will be picking up share options awards at current price. What a coincidence,

[gabsterx] 07/8/2020 12:02

Seems like only cannabis can save big tobacco att this point. Earnings will remain steady otherwise but P/E will keep contracting.

[spud] 07/8/2020 11:40

Definitely a case for investing cash in a new business but, hang on, wasn't that NGP with Auxly and Blu...?

spud

[action] 07/8/2020 11:36

Appreciate your point of view. But if you go in straight jacket of divi in contracting industry like tobacco , you may not be able to pay off you dues if profit slums.

[diggybee] 07/8/2020 11:00

Should buy a more pc business and build that up using the ciggie cash flow for any longevity. Otherwise surely this is slowly going the way of coal as a power supply. Extinct.

[spud] 07/8/2020 10:55

We've always seen that rebasing the dividend simply has the knock on effect of rebasing the price around the original yield. It simply doesn't work for a pure dividend stock. spud

[action] 07/8/2020 10:46

I think if it reaches around 1000p as per buywell chart they will again rebase divi. I think best thing for this dharr is to declare flexible divi based on profits like other mining co. Ie BHP RIO .

[arja] 07/8/2020 10:20

just looked at BATS chart and you are right. chart support at about 2370 it seems .