Imperial Brands shares rise on strong revenue, NGP growth beats expectations

Investing.com -- Shares of Imperial Brands (LON:IMB ) rose on Tuesday after the tobacco and next-generation products (NGP) company posted stronger-than-expected revenue growth for fiscal year 2024. 

At 4:55 am (0955 GMT), Imperial Brands was trading 1.2% higher at £2,429.

“We are reassured by Imperial Brands' healthy top-line performance (particularly NGPs), with FY25 guidance coming in line with expectations,” said analysts at RBC Capital Markets in a note.

The results beat market expectations, with the company's growth in its core tobacco business and robust growth in NGPs driving the positive market reaction.

Imperial Brands reported FY24 tobacco and NGP net revenue growth at constant currency of 4.6%, outpacing the consensus forecast of 3.3%. 

The stronger performance was underpinned by moderating declines in cigarette volumes, which fell by 4% compared to a sharper 7.1% drop the previous year. 

Price/mix gains remained solid at 7.8%, nearly matching the 7.9% seen in FY23.

The NGP segment, which includes products like heated tobacco and vape, continued its upward trajectory, with net revenue growth of 26% at cFX. 

This marked the second consecutive year of double-digit expansion, a clear signal of Imperial’s ability to capture share in this fast-growing market. 

Gross margins in the segment improved, reducing adjusted losses and reinforcing confidence in the company’s investment in NGPs.

Adjusted earnings before interest and tax grew by 4.6% at cFX, slightly ahead of consensus expectations of 4.4%, although absolute EBIT was dampened by foreign exchange headwinds. 

The company’s adjusted earnings per share came in 1% ahead of forecasts, due to favorable interest and tax outcomes.

“We think the slight delta in EBIT guidance vs our expectation is largely due to continued investments behind Zone,” said analysts at Barclays (LON:BARC ) in a note.

Imperial’s guidance for FY25 suggests steady performance, with net revenue growth expected in the low single-digit range and EBIT growth around the mid-single-digit level at cFX. 

Analysts at Morgan Stanley (NYSE:MS ) view the company's outlook as broadly in line with market expectations, with no major revisions anticipated for consensus EPS.

Imperial has also reported continued market share gains in four of its top five tobacco markets, including Germany. 

However, the UK remains a weak spot, with a 0.5 percentage point decline in market share over the year.

With FY25 marking the final year of Imperial’s current five-year transformation plan, the company plans to outline its next phase at a Capital Markets Day in March 2025. 

Source: Investing.com