Imperial Brands 2017 full year results
Strengthening our Portfolio
• Growth Brand volumes up 5.5% with a 80 bps increase in share; volumes outperforming ex. migrations, up 1.1%
• Growth and Specialist Brand revenue up 260 bps to 62.7% of reported tobacco net revenue
• Portfolio simplification strategy on track with more brand migrations and SKU rationalisation
• Continued growth from our Specialist Brands in Premium Cigars, Backwoods, Skruf and Rizla
• Strong e-vapour platform established with new launches and footprint expansion planned in FY18
• Acquisition of nicotine products and services group Nerudia further enhances NGP innovation capabilities
• Progressing optionality in heated tobacco with consumer trials commencing shortly
• Investment in NGP of around £300m included in our FY18 plans, of which £150m is capital investment
Developing our Footprint
• We have successfully delivered share growth in most priority markets despite a tough trading environment
• USA: Winston and Kool gained share; strong performance with mass market cigars
• Growth Markets: Russia, Japan, Saudi and Italy all growing share; China JV delivering strong early results
• Returns Markets: Share gains in UK, Germany and Australia; improved blond share trends in Spain and France
Cost Optimisation
• Cost optimisation programmes delivered £130m of savings
• Further decisive cost action taken to protect investment given a particularly tough environment
• New ways of working resulting in improved effectiveness and cost efficiencies
Capital Discipline
• Cash conversion of 91% and 96% excluding restructuring cash spend
• Proceeds from sell-down of Logista stake funding a share repurchase and net debt reduction
• Non-operating income of £114m including a non-recurring gain of £81m from pension restructure
• Net debt reduction of £0.8bn before adverse translation FX of £0.1bn: adjusted net debt of £12.1bn
• Annual dividend of 170.7p, up 10%; dividend payout ratio of 64%
