Imperial Brands: Rising Risk of Disappointment After FY23

Company Update (IMB LN) (Neutral)

Highlights

• Excluding currency, Tobacco & NGP EBIT only grew 2.9%

• Americas revenues fell, and EBIT fell excluding one-offs

• Europe’s Tobacco volume decline appears to have accelerated

• NGPs subscale in Europe, shrunk in the U.S. and widened loss

• IMB is predicting faster earnings growth just as headwinds build

Introduction

Imperial Brands (“IMB”) reported FY23 (ending September 30) results Tuesday morning (November 14). Shares finished the day up 0.7% in London, but remain 11% down in the past year:

IMB Share Price (Last 1 Year)

Source: Google Finance (14-Nov-23).

We have been consistently cautious on IMB since we started publishing our research online with a Neutral rating in July 2019. (For a recap of our views, see the first IMB article we published on Substack in May.)

We believe the risk of disappointment is rising after FY23 results, with external challenges building just as we are entering a period when management has led investors to expect more earnings growth.

Group Adjusted EBIT grew 3.9% …