Interactive Investor

ii view: income play Imperial Brands shifts to new phase of change plan

9th June 2023 15:24

by Keith Bowman from interactive investor

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Ongoing business resilience and offering a highly attractive dividend yield. Buy, sell, or hold?


First-half results to 31 March

  • Adjusted revenue up 4.8% to £3.66 billion
  • Adjusted operating profit up 7.3% to £1.72 billion
  • Net debt up 4.9% to £10.24 billion
  • Interim dividend up 1.5% to 43.18p per share

Chief executive Stefan Bomhard said:

"We are now in the third year of our five-year strategy, and this means we are moving from the initial foundation-building phase to a period of improving financial delivery. We remain strongly committed to an ongoing programme of shareholder returns and will complete our initial £1 billion buyback during the second half.

ii round-up:

Imperial Brands (LSE:IMB) is a UK, Bristol headquartered tobacco manufacturer operating in over 150 countries. 

Its cigarette or combustible brands include JPS, West, Winston, Davidoff and Kool. 

Its portfolio of potentially less harmful Next Generation Products (NGP) spans the three categories of vapour, heated tobacco, and oral nicotine with blu, Pulse and Zone X three of its brands.

For a round-up of these latest results announced on the 16 May, please click here.

ii view:

Separated out of conglomerate Hanson in 1996, Imperial today operates in over 150 countries. Its cigarette or combustible brands include John Player Special (JPS), West, Gauloises and Winston. Its portfolio of potentially less harmful Next Generation Products spans the three categories of vapour, heated tobacco, and oral nicotine with brand names including blu, Pulse, iD, and Zone X. 

For investors, potential for increased government regulation in relation to Next Generation Products is high. Concerns about their exact impact on consumer health persists, while the broad industry use of flavourings to enhance consumer enjoyment, and even possibly encourage new users, also remains under the spotlight. Higher interest rates have seen the cost of servicing its debt edge higher, while a previous cut to the dividend also proved disappointing given the sector’s reputation for perceived dividend dependability. 

On the upside, a five-year strategy to transform and improve performance is now shifting towards a focus on improving its financial delivery. Its push towards Next Generation products should over time help compensate for the expected fall in the use of traditional combustible products. Group net debt levels remain within management’s comfort range, while significant cash generation provides financial flexible, allowing it to either invest in the business, pay down debt, return cash to shareholders or a combination of these.   

On balance, and while ethical issues will undoubtedly deter some investors, a forecast dividend yield of over 8% will likely continue to attract income investors. 


  • Five-year strategic plan being pursued
  • Attractive dividend yield (not guaranteed)


  • Health concerns for Next Generation Products
  • Ethical concerns leave many funds unable to invest

The average rating of stock market analysts:


These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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