Imperial Brands, the maker of Davidoff and Gauloises cigarettes, Rizla rolling paper and e-cigarettes, has reported its ninth year of 10 per cent dividend growth.
The FTSE 100 company said that its net tobacco revenue for the year to the end of September rose by 8.2 per cent to £7.8 billion. Analysts had expected the figure, which excludes tax on cigarettes, to be £7.7 billion.
Imperial Brands was helped by favourable exchange rates; on a constant currency basis net tobacco revenues fell by 2.6 per cent. The number of cigarettes sold during the financial year also fell, dropping 4.1 per cent to 265.2 billion.
Group pre-tax profits for the year have doubled to £1.86 billion and adjusted operating profit rose to £3.8 billion, better than the £3.6 billion that the market had been expecting. Total revenue rose to £30.3 billion from £27.6 billion.
Imperial has proposed a final dividend of 59.51p a share, which will bring the total dividend for the year up by 10 per cent to 170.72p. The company’s policy is to increase dividends by at least 10 per cent a year over the medium term.
Alison Cooper, chief executive, said: “This was an important year of progress. We significantly increased investment behind our key brand equities and have delivered share gains in most of our priority markets. Our results benefited from the overall share momentum which supported improved second-half net revenue, despite a particularly tough industry backdrop.”
The company plans to step up expansion of its next-generation products and test devices that heat tobacco without burning it. “We have continued to take decisive cost action to mitigate a tough trading environment and protect our investments,” Ms Cooper said.
Shares in Imperial Brands, which have fallen in price by 17.6 per cent over the past year, rose by 1.9 per cent to close at £31.42½p.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the rise reflected the importance to Imperial’s dividend policy to investors. “Fortunately the company generates bucket loads of cash, and a combination of price rises and a firm grip on costs has allowed it to hold up the bottom line. There are other demands on the group’s cash flow at present, not least reducing a significant debt pile, but the dividend remains top priority.”