The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Imperial Tabacco Group: Investec reduces target price from 2580p to 2450p and downgrades from buy to hold.
Imperial Tabacco Group: Goldman Sachs cuts target price from 2470p to 2440p and maintains a neutral rating.
Chief Executive Alison Cooper said: "The growth momentum in key markets in Africa and the Middle East and Asia-Pacific is being offset by the current adverse market dynamics in Europe, with increasing levels of illicit trade. "This reinforces the importance of our two focus areas for 2013: further investing behind our key total tobacco assets and geographies; and accelerating our cost optimisation programme, providing funds for investment and mitigation for the full year given the current European environment."
Imperial gives gloomy outlook In a separate trading update for the first quarter, Imperial said that the macro environment continues to be challenging: "towards the end of the first quarter and into January, market trends have worsened in a number of key markets including in the EU and Russia." The company said that due to its ongoing investment and European market pressures, first-half adjusted operating profit would be down year-on-year, though full-year guidance still remains unchanged, with profits weighted to the second half. Meanwhile, the firm also said that its performance in the EU was hit be further declines in the legal market size as illicit trade continues to rise. For the first quarter, the company reported that stick equivalent volumes had fallen 1.0%. Net revenue had risen over 2.0%, with a price-mix improvement of 3.5% in the three months to December 31st, as "positive momentum" in key markets in the Rest of World division offset by declines in EU volumes, the company said.
Imperial Tobacco announced on Wednesday that its Finance Director is to step down from the company, as it revealed operating profits would decline in the first half. The cigarette and tobacco manufacturer said that long-running Finance Director Bob Dyrbus is to retire from the board until the company can find a replacement. He has been working for the company for 25 years as a senior executive and has held his position as the head of finance since the company listed in 1996. Chairman Iain Napier commented: "On behalf of the board and our employees I would like to thank Bob for the huge contribution he's made to our success. As well as taking overall responsibility for the effective financial management and control of the group for many years, Bob's played a key role in expanding our international operations through acquisitions that have created significant value for our shareholders." The firm also announced that it has appointed Non-Executive Director Mark Williamson, who has been on the board since 2007, as Deputy Chairman.
Positive Points: Reflecting the benefits of an accelerated cost optimisation programme, expectations for the full year remain unchanged. The board expects that around 55% of adjusted operating profits will be delivered in the second half. The company continued to highlight growth momentum in key markets in Africa, the Middle East and Asia-Pacific. Gains were again reported within key strategic brands Davidoff, Gauloises Blondes, West and JPS which now account for almost a third of Imperial’s total stick equivalent volumes. The dividend policy remains progressive. The full year dividend was increased by 11%. Imperial Tobacco benefits from good geographical diversification (products are available in over 160 countries worldwide) and a multi-product portfolio provides a degree of business resilience and a strong platform to deliver future growth. Imperial has been linked with sporadic talk as a takeover target by larger peers
Negative Points: The board expects first half adjusted operating profit to be down year on year. Total stick equivalent volumes declined by 1%. Management noted that "growth momentum in key markets in Africa and the Middle East and Asia-Pacific is being offset by the current adverse market dynamics in Europe, with increasing levels of illicit trade." In Russia, part of its Rest of World region, volumes had been impacted by weaker than expected market demand. Like rivals, Imperial has suffered from a decline in smokers in mature markets. However, it has looked to offset this by hiking prices and expanding into Emerging Markets. Last year, Australia became the first country to pass plain packs laws, implemented in December (2012). Tobacco companies will have to sell products in identical packs with large health warnings on. Other governments such as the UK are thought to be considering such proposals. The tobacco industry is exposed to litigation which could have a significant impact on future financial performance.
Highlights: Stick equivalent volumes down 1% The board expects first half adjusted operating profit to be down year on year Management expectations for the full year remain unchanged
First quarter trading update: The announcement disappointed investors, with the share price down by nearly 5% as of mid morning trade. Management underlined a "challenging" macro environment, noting that "market trends had worsened in a number of key markets including in the European Union (EU) and Russia." As a result and given the group's ongoing investment plans, the board expects first half adjusted operating profit to be down year on year. In the EU, Imperial estimated that the legal stick equivalent market size was currently down around 5% with the legal cigarette market size down around 7%. More positively, and reflecting the benefits of an accelerated cost optimisation programme, expectations for the full year remain unchanged. The board expects that around 55% of adjusted operating profits will be delivered in the second half. Furthermore, the company continued to highlight growth momentum in key markets in Africa, the Middle East and Asia-Pacific, while stick equivalent volumes for fine cut tobacco grew by 9%, underwritten by strong growth in make your own tobacco in Western and Central Europe. Furthermore, in Australia, despite the recent introduction of plain packaging, the first few weeks had seen no significant change in consumption trends. On balance, whilst the group's dividend yield (over 4% as of 30 January 2013 - not guaranteed) remains attractive in the current low interest rate environment, we believe that current favourable analyst opinion may come under near term downward pressure.
Panmure Gordon has retained its 'buy' rating and 2,900p target price cigarette and tobacco group Imperial Tobacco but has raised some concerns after the company noted challenging conditions in some markets in the first quarter. "We remain attracted to Imperial on its valuation; however in order for the discount to its peers to narrow we believe that delivery of its organic strategy needs to accelerate."
Imperial Tobacco Group PLC announced that given ongoing investment and the European market pressures it expects first half 2013 adjusted operating profit to be down year on year. The full year results remain in line with expectations, reflecting the benefits from an acceleration of a cost optimisation programme designed to fund continued investments and offset the current European market pressures; the Company expects that around 55% of adjusted operating profits will be delivered in the second half 2012.
IMT is one of several m&a punts I have at the moment, but I have upped my stake a bit because of tobacco's defensive qualities. But the next 10 years will be a rougher ride than the last decade,IM.
Nice to see some chat on here. Japan tobacco has been talked about for a while as a buyer for IMT but maybe just daily mail talk. Never lost money on tobacco shares, better than gold.
The name that crops up is Jap Tobacco, FYI.
Meanwhile shares in Imperial trade on a multiple of little more than 10 times underlying earnings of 232p for 2013-14 forecast by Investec Securities and come with that nice yield and a rising payout. True, one day, making cigarettes may be criminalised. But that possibility seems sufficiently unlikely and/or far into the future to make shares in Imperial - with its relentless dividend growth - the essence of an 'old reliable'
There are also signs that the damage that Imperial caused itself through buying Altadis just before the Spanish economy slumped is starting to ease. In the year to end September, the company booked a £1.2bn impairment charge on its Spanish operations to reflect a 40 per cent fall in the carrying value of the assets. That should be the last of the major impairments in Spain as the operation has started to perform better – Spanish profits rose 6 per cent in 2011-12. Besides, investors had already discounted the impairments; City analysts say Imperial's accountants were simply catching up with what everyone else already knew. Tobacco's addictive qualities are both a boon and a curse for investors - they ensure steady demand, but also ensure the certainty of heavy taxation, law suits and increasingly tough regulation. Yet these risks have been a fact of life for cigarette makers for decades and have not prevented smooth growth in dividends.
Relying heavily on developed markets, where smoking is in long-term decline, is the chief reason why Imperial's shares are rated lower than British American Tobacco's. Imperial generates over half its revenue from within the EU. And the group could be hit hard by the introduction of controls on smoking and marketing of cigarettes that are starting to be rolled out across eastern Europe. For example, cigarette packs in Russia - Imperial's biggest market - now come with a health warning. However, regulations have not clipped sales growth yet. That's chiefly because Imperial has introduced still-higher prices in the countries that can most easily afford them. For example, a 25p increase in UK prices in July, along with changes in Russia, will start to feed through next year, keeping the company above the declining curve of tobacco consumption. Plain packaging is clearly a threat, but smokers – being addicted – have irrational loyalty to a particular brand.
Certainly, the returns on Imperial's shares have been impressive. Dividends and share buybacks totalled £2.5bn in 2011-12 and the shares offer a yield of 4.8 per cent on the current year's likely payout. Management seems determined to keep that performance going and has signalled that dividends will grow faster than profits over the next few years. The end result may be that Imperial will end up distributing perhaps 80 per cent of its net profits. And, over the medium term, analysts at Berenberg Bank reckon that Imperial's dividend will grow by between 9-11 per cent a year - that's a fair lick for a company in a no-growth industry.
Tobacco will quite likely ruin your health, but it might be good for preserving your wealth. By almost any measure, shares in tobacco companies have enjoyed a charmed life over the past decade. In that period the MSCI Global market index has almost doubled in value with the help of reinvested dividends. Simultaneously, 'global tobacco' has quadrupled, with some individual shares doing even better. It's feasible that the coming years could see more of the same, which is largely why Imperial Tobacco (IMT) qualifies as our 'old reliable' tip of the year. While many investors are not happy with the ethics of investing in tobacco shares, they still hold them almost as a matter of necessity. Given the choice between buying fixed-interest bonds that yield next to nothing and high-yielding shares that come with a low 'beta' - indicating that their price should not bounce around much - investors will choose the equities, even if that means owning the likes of Imperial Tobacco. And, with central banks determined to keep interest rates at record lows, these patterns - preference for high-yielding shares over low-yielding bonds - look like persisting.
I've been watching these too. Looks like SP is on the up with the ex-div date soon. I might buy if they a drop but i doubt it will happen now.
the share that forgot how to go up! I think every day for the last 3 weeks this has gone down.
Imperial Tobacco: Credit Suisse keeps outperform rating and 2,700p target.
Imperial Tobacco’s £1.2bn writedown of its Spanish business is hardly a surprise. The company is the largest operator in the recession-hit country, where a quarter of the workforce is unemployed. Volumes are falling and companies such as Imperial have been increasing prices to boost profitability. It has also been focusing on its core brands, namely Davidoff, West, Gauloises and JPS. These have higher margins, Significantly, the Imperial’s four strategic brands now account for 30% of sales, up from 26% in 2010 when Alison Cooper, chief executive, took the helm. Regionally, the UK and the Rest of the World categories generated the highest growth in adjusted operating profits, rising 8.7% to £627m in the UK, and 9.8% to £872m in the Rest of the World. The company does have a lot of debt, which stands at £9bn, but it is able to service this and the cost of borrowing fell this year to 5.5% from 5.7%. Imperial’s shares continue to trade at a discount to its peers because of this. Last tipped as a buy in September at £23.99 the rating remains the same – buy for the income, The Telegraph´s Questor team says.
Positive Points: Imperial Tobacco said it continues to optimise costs throughout the group, with an additional £200 million invested in 2012 in brand and product initiatives. Strong gains were made within key strategic brands Davidoff, Gauloises Blondes, West and JPS which now account for almost a third of Imperial's total stick equivalent volumes. The group sees significant growth opportunities in its rest of the world region, across Eastern Europe, Africa and the Middle East and Asia-Pacific. The group holds investor appeal as it is a highly defensive predictable cash generator with a progressive dividend policy. The full year dividend was increased by 11%. Imperial Tobacco benefits from good geographical diversification (products are available in over 160 countries worldwide) and a multi-product portfolio provides a degree of business resilience and a strong platform to deliver future growth. Imperial has been linked with sporadic talk as a takeover target by larger peers.
Negative Points: While stick equivalent volumes recovered from the first quarter, the group ended the year with overall stick equivalent volumes declining 2.7%. Economic conditions remain difficult in Spain. High unemployment and increasing government austerity measures are placing further pressures on consumers and the duty paid tobacco market, with illicit trade a growing problem. Like rivals Philip Morris, British American Tobacco and Japan Tobacco, Imperial has suffered from a decline in smokers in mature markets. However, it has looked to offset this by hiking prices and expanding into Emerging Markets. Last year, Australia became the first country to pass plain packs laws, due to be implemented in December (2012). Tobacco companies will have to sell products in identical packs with large health warnings on. Other governments such as the UK are thought to be considering such proposals. Currency movements provide potential headwinds. The tobacco industry is exposed to litigation which could have a significant impact on future financial performance.