Imperial Brands Share Discussion Threads

[huckers] 15/5/2024 06:06

BUSINESS HIGHLIGHTS

• Strong tobacco pricing up 8.6% more than offsetting volume declines

• Delivering stable aggregate market share in our five priority markets in line with our strategic objective

• Next Generation Product net revenue up 16.8% by building scale in our market footprint and product innovation

• Adjusted earnings per share benefited from adjusted operating profit growth and share count reduction

• Cash conversion was strong on 12-month basis supported by improved working capital

• Delivering the £1.1bn share buyback this year, alongside an increased interim dividend up 4.0%

• Continued confidence in successful delivery of full-year results in line with guidance, with returns improving in line with five-year strategy

[jrphoenixw2] 13/5/2024 11:42

Interim Results due Wednesday/15th.
I see at the same event last year the Q1+Q2 divs were announced.

[action] 05/5/2024 09:22

In loss though

[action] 05/5/2024 09:22

Waiting for 2200p to close my position after 2017...

[marktime1231] 02/5/2024 12:08

What does that mean? IMB can refinance its existing debt on similar terms and does not need to pay it down further than ebitda x 2, no pressure to further enhance its credit rating to lenders. Cash flow will not be channelled in that direction then.

Yes it would be good to know if IMB settled up that bond using undrawn debt facilities - anything costing less than base rate + 3% would have been an improvement - or has it issued new bonds to the market. Surely they would have announced the latter?

[huckers] 02/5/2024 11:52

Here is the link to the Fitch Rating Action Commentary:

www.fitchratings.com/research/corporate-finance/fitch-affirms-imperial-brands-at-bbb-outlook-stable-29-04-2024

This is the piece about their debt structure:

"Adequate Liquidity: At FYE23, IMB had GBP1.2 billion of unrestricted cash (as defined by Fitch) and undrawn committed revolving facilities of EUR3.1 billion available until September 2026, EUR184 million until March 2026 and EUR184 million until September 2025. This leads to an overall adequate liquidity cushion to meet short-term debt of GBP1.5 billion due in FY24.

Additionally, the company has access to GBP550 million of bilateral committed credit facilities maturing in September 2024. Most debt is composed of bonds issued by its wholly-owned Imperial Brands Finance PLC and guaranteed by IMB and by its UK operating subsidiary, Imperial Tobacco Ltd."


They haven't updated their debt summary on their investor site and I am still trying to find what they did with regards to the £600m @ 8.125% bond that matured in March.

[muscletrade] 30/4/2024 06:30

Fitch Maintains Imperial Brands' Ratings on Conservative Financial Structure, Low Regulatory Risk
April 30, 2024 at 06:10 am

(MT Newswires) -- Fitch Ratings on Monday affirmed its long-term issuer default and senior unsecured instrument ratings on Imperial Brands (IMB.L) at BBB, with a stable outlook.
The rating action is supported by the British tobacco company's focus on mature and highly regulated combustible tobacco markets, as well as its conservative financial structure that is in line with the lower band of its communicated leverage target.

It also reflects Imperial Brands' lower regulatory risk compared with peers following a decision to review its approach to next-generation

[marktime1231] 22/4/2024 12:13

Edged what?

The approx £1.5B net proceeds of BAT's disposal of an ITC stake being put to a buyback which will cut nearly 3% of stock spread over a two year programme.

vs

The second £550M tranche of IMBs ongoing buyback will remove another 3.5% of stock in just 6 months.

So in that ballgame IMB is smashing BAT out of the park.

In BATs favour it is yielding nearly 10% on its current depressed share price whereas IMB is "only" yielding 8%.

[montyhedge] 22/4/2024 07:23

Both good shares but Bats just edged it with the stake in ITC worth billions and buybacks until the end of 2025 if I remember rightly.

[valuehurts] 21/4/2024 07:45

We should make many multiples of our money with the current strategy and you are after a 40 percent pop? Private equity is private not a fund and they mostly do not care about ESG etc.. they use debt to buy companies on the cheap then use the companies underlying cash flows to pay off the debt used in the acquisition. This is why all tobacco companies use a lot of debt and will continue doing so

[action] 19/4/2024 14:00

This is doing better compare to BATS

[shareideas1] 11/4/2024 15:55

Yes they are in a post Covid super cycle having been bailed out through Covid...

[fenners66] 11/4/2024 15:32

You mean the profit would go up,debt down, dividends and share price up and some non ESG fund would come and offer us a 40 percent premiumm and possibly sack some of the directors?
Terrible if you are a director without a contractual massive pay off. Not bad for every shareholder whom also get the chance to reject it of course.

[valuehurts] 11/4/2024 11:29

Lol if imperial reduces debt it will be taken over and loaded with debt by PE. They will always hold quite a lot of debt. They won't reduce it much further than current levels.

[fenners66] 10/4/2024 13:37

Sorry off topic but Delta airlines results just landed beat expectations and "no sign of demand letting up"

[fenners66] 10/4/2024 12:58

So then you are saying whilst holding up Buffett to be an amazing investor ...
that he got it totally wrong to invest in the US airline industry at all , any time as its not a good long term
business. Not just poor timing.

So he makes mistakes - very very big ones?

Why then do many quote as a reason for buybacks - its good enough for Buffett ?

Anyway I don't think the merits or demerits of buybacks have anything to do with it.
The institutions may not dictate that much to the BODs but one thing they do is share BB
since they hold the cards they get what they want.

[shareideas1] 10/4/2024 12:52

Right now yes... but hugely capital intensive and extremely cyclical earnings which create the natural boom and bust

[louis brandeis] 10/4/2024 12:51

So airline stocks have a medium-term trading opportunity based on post COVID under-capacity. That doesn't make them good long term investments. Their quality of earnings is poor, just like the residential house builders. Poor in the sense, not of size, but of long-term sustainability.

[fenners66] 10/4/2024 12:44

From a Jan 24 article ..

Delta Airlines pre tax $6.44bn +119%
United Airlines $5.16bn + 94%
American Airlines $3.26bn +52%

Right now they can charge almost what they want...

[louis brandeis] 10/4/2024 12:42

fenners

Yes, decreasing debt will increase intrinsic value and it is an option open to the management at anytime going forward.

Of course, generally, one has to be very careful with debt reduction because if the market cap is small enough reducing debt too far increases the chances of having unwanted suitors (funding buyouts with debt). And then, to the likes of you and me, the opportunity of benefitting from future earnings and cashflows disappears completely. However, I think this is very unlikely here. Perhaps likely with some of the small cap house builders ATM - Crest Nicholson, for example.

[shareideas1] 10/4/2024 12:29

Airlines are terrible businesses

[fenners66] 10/4/2024 12:26

Louis

You can increase intrinsic value for every shareholder by removing the debt (as explained above).

This is more relevant with a mature company and a declining market like IMB as they are less likely to
need further large funds to reinvest in the business in the future.
The new CEO seems to agree as he believes sticking to the knitting and improving the efficiency of the
core business is the way forward

[louis brandeis] 10/4/2024 12:01

Thank you Huckers. I appreciate that. :)

[fenners66] 10/4/2024 11:59

The US airlines have a great business.
Right now they can charge what they want (almost) and are charging more because they cannot get planes.

Their problems were caused by buybacks about 5 years ago.
Since they knew best they bought back cumulatively $100bn
Then covid etc and suddenly they needed , guess what , $100bn just to survive.
I think it was massive share dilution as well as govt funding that kept them alive - too big and too important to fail.

Buffett bailed and lost $7bn

[huckers] 10/4/2024 11:55

Louis. A very lucid set of arguments/explanations. Thank you.