Imperial unveils £1bn share buyback as it cheers boost from travel rebound

Linda Stewart — Thu, 06 Oct 2022 11:30:52 +0000

Tobacco giant Imperial Brands has revealed plans for a £1 billion share buyback as it hailed the recovery of global travel markets for buoying duty-free sales and revealed a boost from the battered pound.

The group behind brands such as blu, Gauloises cigarettes and Rizla said the boost from travel markets has driven higher sales across southern Europe and in duty-free markets, which is helping partly offset a drop in sales by volume, particularly in northern Europe.

It added that the growth rate of tobacco net revenues had improved over the second half of its financial year due to price changes.

Imperial has also been given a fillip by the weak pound, which is seeing the group benefit from exchange rates on its international earnings, with a gain of about 1% on full-year net revenues and 2% on annual underlying earnings per share.

The pound hit an all-time low against the US dollar last month amid concerns over the Government’s economic plans and while it has clawed back some lost ground, it is still down heavily this year.

On a constant currency basis, Imperial said it remains on track for full-year revenues and underlying earnings to grow by around 1%.

Imperial announced the launch of its share buyback programme, saying its “strengthened balance sheet position means we are now in a position to start to return surplus capital to shareholders”.

It will buy back up to £1 billion of shares until the end of September next year, bringing total capital returns over 2022-23 to more than £2.3 billion.

Stefan Bomhard, chief executive of Imperial Brands, said: “The launch of our new buyback programme is an important milestone in our five-year strategy announced in January 2021.

“Over the past two years, increased investment and a more consumer-centric approach have improved delivery in both our priority combustible markets and next generation product operations.

“Disciplined capital allocation has strengthened our balance sheet to reach our target leverage levels.

“Today’s announcement is underpinned by this improving performance and our confidence in being able to continue generating strong cash flows to support growing shareholder returns in the years to come.”

The group’s update added that it was rolling out its vaping and heated tobacco products – or so-called next generation products – into new markets, having recently launched its heated tobacco brands Pulze and iD in Italy, which is Europe’s largest heated tobacco market.

Shares lifted 4% after the update.

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Tesco raises full-year forecast following 16.6% jump in profit

Linda Stewart — Wed, 06 Oct 2021 14:25:47 +0000

Tesco has raised its full-year earnings forecast after the scale of its store and online operations helped it to outperform rivals in the first half.

The supermarket giant beat expectations with a 16.6% jump in profit at a time when retailers are battling supply chain disruptions and labour shortages.

“We’ve had a strong six months; sales and profit have grown ahead of expectations, and we’ve outperformed the market,” Tesco CEO Ken Murphy said.

“With various different challenges currently affecting the industry, the resilience of our supply chain and the depth of our supplier partnerships has once again been shown to be a key asset.”

Buyback plan

Tesco said the strong performance had allowed it to cut net debt by £1.7 billion pounds since February, and it could now afford to start a multi-year share buyback, with the first £500 million to be bought by October 2022. It also paid an interim dividend of 3.2p, in line with a year ago.

The supermarket chain forecast a full-year adjusted retail operating profit of £2.5-2.6 billion, having previously forecast a similar outcome to 2019-20, when it made £2.3 billion.

The company, which has a 27% share of Britain’s grocery market, made an adjusted retail operating profit of £1.39 billion in the first half versus £1.19 billion a year earlier.

Group sales rose 3% to £27.3 billion, while UK like-for-like sales climbed 1.2%, having risen 0.5% in the first quarter.

Winning strategy

Analysts say Tesco is benefiting from a strategy to match prices at German-owned discounter Aldi on around 650 lines and the success of its ‘Clubcard Prices’ loyalty scheme.

The proportion of customers using Clubcard in large stores has grown to 80% from 69% last year, with about seven million shoppers now using the scheme through an app.

Despite inflationary pressures, Tesco said its customers saw prices fall in the first half and they were still falling in the second half.

Murphy also set out Tesco’s strategic priorities going forward – value, customer loyalty, convenience and using cost savings to invest.

“Customers are faced with an increasing range of choice as to where, when and how to shop and the competitive environment has materially changed,” he said.

“We believe that against this backdrop we can thrive.”

The post Tesco raises full-year forecast following 16.6% jump in profit first appeared on Neighbourhood Retailer.

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Imperial unveils £1bn share buyback as it cheers boost from travel rebound

Tesco raises full-year forecast following 16.6% jump in profit