Imperial Tobacco More Profitable than Competitors

Imperial Tobacco has secured its stable moat status following positive full-year results as equity analysts confirm the company is more profitable than its peers

Philip Gorham 4 November, 2014 | 3:00PM
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Imperial Tobacco's (IMT) preliminary full-year results for the fiscal year ending September 30 2014 were almost exactly in line with our forecasts. The firm held its own against its larger competitors in the global tobacco industry, lending support to our wide economic moat rating. As there were few surprises in the earnings report, and with an unchanged short and long-term outlook, we do not expect to make material changes to our £26.50 fair value estimate.

After adjusting for some non-recurring items, including trade inventory adjustments and Master Settlement Agreement credits, underlying net revenue grew by around 2% in the fiscal year. This is in line with the nine month results recently reported by Philip Morris International (PM) and British American Tobacco, demonstrating that Imperial is executing on its strategies in both Returns and Growth Markets.

Volume contraction of 4% was softer than that reported by its larger competitors on a year-to-date basis, but the underlying volume increase of 7% in its Growth Brands portfolio was slightly better than the 6% growth reported by British American (BAT) for its focus brands.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
British American Tobacco PLC2,663.50 GBX-0.22Rating
Imperial Brands PLC1,551.00 GBX-0.10Rating
Philip Morris International Inc102.83 USD-1.13Rating

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Philip Gorham  

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