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Imperial Brands PLC ADR IMBBY

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Morningstar’s Analysis

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Imperial Brands Reports Solid Fiscal 2020 but Transformative Changes Needed to Unlock Value

Analyst Note

| Philip Gorham, CFA, FRM |

Imperial Brands released reasonably strong full year results for fiscal 2020. Both volume and margins were ahead of our expectations. We continue to regard Imperial as being materially undervalued, and although this stable trading performance and guidance of modest profit growth next year is good news, we think it will take the communication of clear strategies to increase price/mix in the cigarettes portfolio and to gain share in next generation products for the upside to the market value to be realised. We retain our GBX 3,400 fair value estimate.

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Company Profile

Business Description

Imperial Brands is the world's fourth-largest international tobacco company (excluding China National Tobacco) with total fiscal 2019 volume of 244 billion cigarettes sold in more than 160 countries. The firm holds a leading global position in the fine-cut tobacco and hand-rolling paper categories and is a leading seller of cigars in several countries, although some of these assets may be disposed of in the foreseeable future. Recent acquisitions in the United States make Imperial the third-largest manufacturer in that market. Through its acquisition of Altadis, the firm has a logistics platform in Western Europe.

121 Winterstoke Road
Bristol, BS3 2LL, United Kingdom
T +44 1179636636
Sector Consumer Defensive
Industry Tobacco
Most Recent Earnings
Fiscal Year End Sep 30, 2020
Stock Type
Employees 32,000