Imperial Tobacco 5.6% dividend is attractive: Imperial Tobacco is a solid, defensive share that offers a 5.6% prospective dividend. Management said trading was on track to hit full year market expectations and, for investors looking for income, the stock remains a solid option. The FTSE 100-listed tobacco giant, which makes Davidoff and Gauloises Blondes, said it sold 91.7 billion cigarettes in the nine months ended June 30, a 1% fall. Revenues also dropped 1%, to £4.75 billion, in the period. In fact, the results for the nine-month period show a marked improvement at Imperial. The company was showing cigarette volumes down 3% and revenues down 5% at the half year stage. The company is spending £4.2 billion on buying U.S. cigarette brands Winston and Kool, as part of the $25 billion (£15 billion) merger between two of the world’s biggest tobacco groups – Reynolds American and Lorillard. Alison Cooper, one of the few female Chief Executives of a FTSE 100-listed company, reassured Imperial investors that a rights issue would not be needed to complete the deal, as debt financing had already been agreed. However, the group said it would suspend its share buy-back programme to speed up debt repayment. Imperial has been slowly moving into the growing e-cigarettes sector, and is due to launch its own version this year through its Fontem Ventures unit. It has been trailing its main U.K. rival, British American Tobacco (BAT), which launched its first e-cigarette last year. Over the long term, the tobacco industry is not expected to have a problem increasing prices to combat falling volumes. Imperial’s balance sheet is strong and the company remains an excellent place to park cash. Imperial Tobacco at 25.85+59p Questor Says “Hold”.
19 Aug '14
mperial Tobacco Group Plc (IMT.L) Announced, in its interim management statement for the nine months ended 30 June 2014, that the guidance for the full year continues to be modest adjusted earnings per share growth at constant currency with dividend growth of at least 10.0%. The Growth brands outperformed the market with volume growth of 3.0% and net revenue up 7.0%. The Specialist brands supported the total tobacco portfolio with net revenue gains of 3.0%.
1 Aug '14
Hold British American Tobacco for 4.4% dividend: British American Tobacco’s first half profits were hit by the strength of the pound but shareholders should stay focused on the long-term performance instead of being sidetracked by fluctuations in global currency markets. Europe’s largest tobacco group is focusing on its core global brands of Rothmans, Dunhill, Lucky Strike and Pall Mall and has been able to increase prices despite the subdued market backdrop. The cigarette group is using its strongest brands to expand in emerging markets, where cigarette volume was up by 5.7% during the first half. The company said it was taking market share in Asia-Pacific, Brazil and South Africa where sales of Dunhill were up 4.9%, and this offset declines of the Kent brand in Russia and Romania. The interim dividend was increased 6% to 47.5p and the shares go ex-dividend on August 20 with a payout on September 30. The prospective yield is 4.1%, rising to 4.4% next year. The pricing power that tobacco companies have is exceptional because people are addicted to their product and emerging economies are taking up some of the slack from Western markets where volumes are falling the fastest. These companies continue to be cash-generating machines that are ideal for income seekers, as long as they put the ethics of their investment to one side. Trading on a 2014 earnings multiple of 16.8 falling to 15.5, the rating remains hold. British American Tobacco at £35.23 -44p Questor Says ‘Hold’.
31 Jul '14
FT comment on BATS
it of the vapers: Strong sterling is the immediate challenge for British American Tobacco, whose interim operating profits slipped 12% to £2.46 billion. The long-term battle remains reputational, as regulation of cancer sticks intensifies. Demonstrating admirable chutzpah, Bats is seeking a product endorsement from a Department of Health agency. This prompts thoughts of old adverts urging Edwardians to smoke Dr Crippen’s Patent Asthma Mix For Healthier Lungs. But the multinational, helmed with sardonic brio by Nicandro Durante, wants a fillip for electronic cigs rather than the combustible sort. Confirmation that vaping is safer than smoking could encourage doctors to prescribe the devices, giving a small but useful fillip to sales. Big tobacco is probably more than a little afraid of the devices. The business that can patent an ecigarette as satisfying as a regular fag will have a category killer that could also hollow out mature cigarette markets. The old game of combating sales declines with marketing would be over for tobacco giants. For the moment it continues with BAT resisting U.K. government plans for plain packaging. A KPMG study found sales of smuggled packs that were branded but untaxed rose from 11.8 to 13.9% of the market in Australia after a similar reform. We may surmise a similar increase in the U.K. would reduce the tax take by £210 million yearly. However, tobacco-funded research has a poor record.
30 Jul '14
Currency headwinds blew earnings per share 12% lower at British American Tobacco in the first half of the year, although underlying profits improved if exchange rates were held steady. Group revenue was up 3% at constant rates of exchange to £7.78bn, but down by 10% to £6.80bn at the reported level due to the adverse exchange rate movements.
15 Jul '14
* Offers $68.88 per share, premium of 2.5 pct * To sell Salem, Winston, KOOL and blu brands to Imperial Tobacco * BAT to buy shares in Reynolds to keep 42 pct stake * Lorillard, Reynolds shares down (Recasts to add CEO comments to add CEO comments, additional background on menthol cigarette regulatory issues) By Anjali Athavaley July 15 (Reuters) - Reynolds American Inc's proposed $25 billion acquisition of smaller rival Lorillard Inc shows how the tobacco company is placing its bets on the market for menthols even as a growing number of smokers opt for e-cigarettes. With the deal, Reynolds American picks up Newport menthol cigarettes, one of the few U.S. brands that is gaining share in a shrinking market. At the same time, Reynolds is giving up blu - the top-seller in the e-cigarette market seen by many as the tobacco industry's future - to Britain's Imperial Tobacco Group. As part of the deal, Imperial will buy Reynolds' Salem, Winston and KOOL and Lorillard's Maverick brands in a move meant to ease potential antitrust concerns. Experts say that still may not satisfy regulators. Sources familiar with the transaction said gaining the blu brand made the deal more attractive to Imperial. While cigarette sales volume has been falling about 4 percent a year, e-cigarette sales have been booming. Reynolds sells its own e-cigarettes under the Vuse brand but controls less than 5 percent of the market, according to market research firm Euromonitor International. Reynolds' purchase of Lorillard's Newport brand gives the company a stronger presence in the market for menthol cigarettes. Menthols now make up 31.4 percent of the total market compared with 26 percent in 2002, according to Morningstar. "The e-cigarette category is very small today," said Susan Cameron, chief executive of Reynolds. "It's growing and consumers are interested in it, but this transaction is really about adding Newport to our portfolio." Menthol is a mint-flavored additive that may reduce the irritation and harshness of smoking when used in cigarettes, according to the U.S. Food and Drug Administration. Experts say menthols have disproportionate popularity among young people, lower-income smokers and African-Americans. The FDA last year released a preliminary review that said that a majority of African-American smokers use menthol cigarettes. Menthols were also associated with lower socioeconomic status, according to the FDA review of available studies. But the deal shows that Reynolds isn't banking on significant regulation of menthols by the FDA, which regulates the substance in medical products but not in cigarettes. The agency is conducting its own studies on the topic and has said it would consider restricting the use of menthols. In an interview, Lorillard's chief executive officer, Murray Kessler, said both companies are confident there is no justification for regulating menthol cigarettes differently than nonmenth
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